THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

REPORTABLE
Case number :  323/06

In the matter between :

MERRY HILL (PTY) LTD

APPELLANT

and

HENDRIK JOHANNES ENGELBRECHT
RESPONDENT

CORAM :
CAMERON, BRAND, LEWIS, MAYA JJA et
THERON AJA

HEARD :
3 MAY 2007

DELIVERED :
24 MAY 2007

Summary:
Section 19(2)(c) of the Alienation of Land Act 68 of 1981 – though
peremptory in its terms substantial compliance sufficient – requirements of
section satisfied by notice indicating alternative steps intended by seller upon
purchaser's failure to rectify breach.

Neutral citation: This judgment may be referred to as Merry Hill v Engelbrecht [2007] SCA 60
(RSA)

BRAND JA/

BRAND JA:

[1] This appeal turns on the interpretation of s 19(2)(c) of the Alienation of
Land Act 68 of 1981. The appellant ('Merry Hill') sold two residential erven in
Cintsa near East London to the respondent ('Engelbrecht') in terms of an
agreement of sale by instalments. When Engelbrecht failed to pay some of
these instalments, Merry Hill purported to cancel the sale and then resold the
erven to two others. Engelbrecht refused to accept the validity of the
cancellation on the narrow basis that Merry Hill's preceding notice of demand
did not comply with s 19(2)(c) of the Act. As a result, he approached the
Eastern Cape High Court for an order interdicting Merry Hill from transferring
the erven to the subsequent purchasers. In a judgment which has since been
reported as Engelbrecht v Merry Hill (Pty) Ltd 2006 (3) SA 238 (E), the court a
quo (Plasket J) upheld Engelbrecht's contentions regarding the invalidity of
Merry Hill's purported cancellation. Accordingly, the interdict sought was
granted with costs. The appeal against that order is with the leave of the court
a quo.

[2] In this court Engelbrecht appeared in person, not represented by
counsel or an attorney. In consequence, Mr P J J Zietsman of the Free State
Society of Advocates was requested by the court to assist, as amicus curiae,
in establishing the meaning of the statutory provisions concerned. At the
outset I wish to convey the court's appreciation to Mr Zietsman for his able
performance of this task in the best traditions of the advocates' profession.

[3] The background facts, which were essentially common cause, are set
out in the reported judgment of the court a quo (paras 5-10). For present
purposes the bare essentials will therefore suffice. They are as follows.
Engelbrecht did not deny that he fell into arrears with the instalments
stipulated in the agreement of sale. Though he blamed his default on his
erstwhile bookkeeper, he accepted that this did not absolve him from his
contractual obligations and that he was therefore in breach of the agreement.
In the result, clause 9 of the agreement came into operation. In terms of this
clause, failure by Engelbrecht to comply with the contract entitled Merry Hill to

insist that he rectify his breach within 30 days 'by way of written demand as
set out in s 19 of the Act'. Broadly stated, clause 9 further provided that, upon
Engelbrecht's failure to rectify the breach Merry Hill became entitled either to
claim immediate payment of the full balance of the purchase price or,
alternatively, to cancel the contract and retain all payments already made.

[4] The provisions of s 19 of the Act here relevant appear from
subsections (1) and (2). They read as follows:

'(1)
No seller is, by reason of any breach of contract on the part of the purchaser,
entitled –
(a) to enforce any provision of the contract for the acceleration of the payment of any
instalment of the purchase price or any other penalty stipulation in the contract;
(b) to terminate the contract; or
(c) to institute an action for damages,
unless he has by letter notified the purchaser of the breach of contract concerned and made
demand to the purchaser to rectify the breach of contract in question, and the purchaser has
failed to comply with such demand.
(2) A notice referred to in subsection (1) shall be handed to the purchaser or shall be sent to
him by registered post to his address referred to in section 23 and shall contain -
(a) a description of the purchaser's alleged breach of contract;
(b) a demand that the purchaser rectify the alleged breach within a stated period which . . .
shall not be less than 30 days calculated from the date on which the notice was handed to the
purchaser or sent to him by registered post, as the case may be; and
(c) an indication of the steps the seller intends to take if the alleged breach of contract is not
rectified.'

[5] After Engelbrecht had fallen into arrears on a number of occasions,
Merry Hill decided to invoke the provisions of clause 9 of the contract. It
therefore instructed its attorney, Mr J E Bax, to demand rectification of the
breach in accordance with s 19 of the Act. In an attempt to comply with the
provisions of s 19, Bax sent a letter to Engelbrecht by registered post to his
address referred to in s 23 of the Act. Since the contents of the letter patently
complied with subsecs 19(2)(a) and (b) of the Act, I focus on that part which
sought to observe the requirements of s 19(2)(c). It reads as follows:

'In accordance with clause 9.1 of the Deed of Sale we have been instructed by the Seller to
demand from you, as we hereby do, payment of the [arrear instalments in the] sum of
R22 534,00 at our offices . . .  within 32 days of the date of this letter.
Should payment not be made as aforesaid then and in that event, the Seller shall be entitled
to claim immediate payment of the full balance of the purchase price and interest as due by
you, as well as all costs and collection commission; or alternatively shall be entitled to cancel
this contract.'

[6] After the 32 days' grace had lapsed, Bax sent another letter, again by
registered post, informing Engelbrecht that, as no payment had been made in
terms of the letter of demand, he had been instructed by Merry Hill to cancel
the agreement of sale. According to Engelbrecht, he became aware of the
letter of demand only after Merry Hill had already purported to cancel the
agreement. It happened, he explained, when he discovered the letter amongst
a pile of documents which had been left by his erstwhile bookkeeper when
she was dismissed on account of theft and fraud. Again he accepted,
however, that both the letter of demand and the letter of cancellation had
reached his chosen domicilium citandi and that the omissions of his deceitful
bookkeeper could not be laid at the door of Merry Hill.

[7] Engelbrecht's attack on the validity of the cancellation was therefore
confined, as I have said earlier, to the contention that the letter of demand
preceding the cancellation did not comply with the requirements of s 19(2)(c)
of the Act. His argument in support of this contention, which eventually found
favour with the court a quo, was that the purported notice contained in the
letter was defective in two respects, First, because, on a proper interpretation,
s 19(2)(c) does not allow the seller to indicate the steps he or she intends to
take by way of alternatives, as Merry Hill professed to do. Secondly, and in
any event, because the notice did not indicate what Merry Hill intended to do,
but only recorded what it was entitled to do, upon his failure to purge his
default.

[8] As appears from the judgment of the court a quo (paras 15-21) its
endorsement of Engelbrecht's first argument, that s 19(2)(c) does not allow
the seller a reservation of choice between alternative remedies, was for the

most part influenced by two earlier judicial pronouncements on the
interpretation of the provision, to wit in Oakley v Bestconstructo (Pty) Ltd 1983
(4) SA 312 (T) and in Miller v Hall 1984 (1) SA 355 (D).

[9] The s 19 notice relied upon in Oakley (as it appears at 315B-D) tersely
informed the purchaser 'that unless we receive your payment of the balance
of the purchase price still due to our client within 30 days from date hereof,
our client will in its sole and absolute discretion act against you in terms of
para 9 of the deed of sale . . .'. Grosskopf J's finding (at 319A-G) that this
notice fell short of what is required by s 19(2) seems to be largely based on
subsec 2(a) in that, in his view, the notice did not contain a proper description
of the purchaser's alleged breach. The learned judge then added, almost as
an aside (at 319G-320D) – and with the express reservation that he did not
profess to give an exact interpretation of s 19(2)(c) – that the notice also failed
to comply with the last-mentioned subsection, in that it reserved the right to
the seller to chose between the alternative remedies available to it under the
contract until after the 30-day notice period had lapsed.

[10] More pertinent in the present context was the decision by Page J in
Miller (at 361F-362D) that s 19(2)(c) requires the purchaser to be apprised of
precisely what step, of those enumerated in s 19(1), the seller intends to take
in the event of the purchaser's failure to remedy the breach. What the
legislature intended, Page J held, is that defaulting purchasers should know
exactly what consequences were to ensue if they persist in their default, so as
to enable them to arrange their future conduct accordingly. Consequently, the
learned judge concluded, a mere recital of the alternative steps which the
seller might elect to take after the 30-day notice period, was not enough.

[11] Rather surprisingly, the interpretation of s 19(2)(c) was not revisited, at
least not in any reported decision, for over twenty years. When the revisitation
eventually took place, it happened twice in quick succession, first by the court
a quo in this matter and then by a full court of the Witwatersrand Local
Division (CJ Claassen J, with Jajbhay J concurring) in Van Niekerk v Favel
2006 (4) SA 548 (W). While the court a quo, as we know, followed the two

earlier decisions in Oakley and Miller, the full court in Van Niekerk came to the
diametrically opposite conclusion with regard to what s 19(2)(c) requires.

[12] Accordingly the full court held the letter of demand in Van Niekerk (as
set out in para 8) to constitute proper notice in terms of s 19(2)(c), despite the
fact that it pertinently reserved the seller's option to choose between the
alternative remedies of claiming cancellation or acceleration of the payment of
instalments, until after the 30-day notice period had lapsed. Central to the
court's answer to the reasoning in Miller is the following statement by
Claassen J (para 30):

'In my view, if the Legislature intended to restrict the contents of the letter of demand to
specifics, it could easily have done so by using stronger language, alternatively, demanded
an express election of the remedies mentioned in s 19(1) to be stated categorically in the
letter. This it did not do. In my view, the statutory requirement to give an "indication" of the
seller's future conduct, must be given a broad interpretation, more in line with the meaning of
a "hint" or "suggestion". . . .  In my view, the Legislature intended to oblige the seller merely to
inform the purchaser that he has elected to act upon any failure by the purchaser to rectify the
breach. He is in effect saying to the purchaser: "I have elected not to abide your breach any
longer. Should you fail to remedy it, I will take steps against you. So beware!".'

[13] In considering the meaning of s 19(2)(c), this court therefore has the
benefit of well reasoned judgments supporting both points of view, as well as
the contributions by academic authors referred to in those cases. Let me start
with a proposition which appears to be beyond contention, namely, that the
purpose of Chapter 2 of the Act, which includes s 19, is to afford protection, in
addition to what the contract may provide, to a particular type of purchaser – a
purchaser who pays by instalments – of a particular type of land – land used
or intended to be used mainly for residential purposes. In this sense,
chapter 2, like its predecessor, the Sale of Land on Instalments Act 72 of
1971, can be described as a typical piece of consumer protection legislation
(see eg Gowar Investments v Section 3 Dolphin Coast and Cameron [2006]
SCA 162 (SCA) para 9). The reason why the legislature thought this
additional statutory protection necessary is not difficult to perceive. It is
because experience has shown this type of purchaser, generally, to be the

vulnerable, uninformed small buyer of residential property who is no match for
the large developer in a bargaining situation (cf Glen Anil Finance (Pty) Ltd v
Joint Liquidators, Glen Anil Development Corporation Ltd (in liquidation) 1981
(1) SA 171 (A) at 183F-H).

[14] In this light, the purpose of s 19 was clearly to afford additional
protection to purchasers in this category who, by reason of their default, are
exposed to a claim by the seller of the kind contemplated in s 19(1). By its
very nature, the corollary of this additional protection must, however, involve
the imposition of limitations on the contractual rights of the seller. And, in
accordance with the general approach to statutory interpretation, legislative
limitations on common law contractual rights will be confined to those that
appear from the express wording or by necessary implication from the
statutory provision concerned (see eg Wellworths Bazaars Ltd v Chandler's
Ltd 1947 (2) SA 37 (A) at 43).

[15] Another consideration of relevance, in my view, is that the stricter
interpretation of s 19(2)(c), subscribed to in Miller and in the judgment of the
court a quo, imposes an obligation on the seller that is substantially more
onerous than merely requiring the seller to impart more comprehensive
information to the purchaser. What the stricter interpretation calls for is that
the seller makes an election between alternative remedies and informs the
purchaser of that election prior to extending the 30-day notice. Even where
the seller has contractually reserved the right to postpone that election until it
finally becomes available, ie until after the notice period had lapsed, he or she
will be deprived of that right of reservation. Moreover, according to the
doctrine of election, the seller would be bound by that choice; he or she will
not be able to have a change of mind if the purchaser should fail to purge the
default during the 30-day notice period. This appears, in my view, from the
following succinct statement of the principles involved by Friedman JP in
Bekazaku Properties (Pty) Ltd v Pam Golding Properties (Pty) Ltd 1996 (2)
SA 537 (C) at 542E-F:

'When one party to a contract commits a breach of a material term, the other party is faced
with an election. He may cancel the contract or he may insist upon due performance by the
party in breach. The remedies available to the innocent party are inconsistent. The choice of
one necessarily excludes the other, or, as it is said, he cannot both approbate and reprobate.
Once he has elected to pursue one remedy, he is bound by his election and cannot resile
from it without the consent of the other party.' (My emphasis.)
(See also Segal v Mazzur 1920 CPD 634 at 644-5.)

[16] An illustration of the finality of an election in the present context is to be
found in Walker v Minier et Cie (Pty) Ltd 1979 (2) SA 474 (W) at 479A-G (to
which reference is made by Page J in Miller at 362H-363E). What the seller in
Walker announced in its letter of demand was that it intended to claim the
outstanding balance of the purchase price if the purchaser should fail to
remedy the default within 30 days. When that happened, the seller tried to
change his mind by cancelling the contract. In applying the doctrine of
election, the court held, however, that the seller was precluded from doing so.
It is true that it was also held in Walker (at 480D-H), obiter, as it were, that a
seller who has indicated an intention to claim performance of the contract can
still claim cancellation at a later stage, if the purchaser persists in his or her
default during the 30-days notice period, provided that another 30-day notice
is given in which cancellation is signified. Whether this is so, is, in my view,
not necessary to decide. I say this for two reasons. First, as I understand the
position regarding election, the suggested solution will operate one way only,
ie where the seller threatens to demand specific performance. If, by contrast,
the seller threatens to claim cancellation he will be finally bound by that
choice. He will not be able to change his mind if the purchaser persists in
default, whatever the position may be where he threatened to claim specific
performance instead (see eg Consol Ltd t/a Consol Glass v Twee Jongen
Gezellen (Pty) Ltd (2) 2005 (6) SA 23 (C) paras 35-36; Christie, The Law of
Contract in South Africa 5 ed at 541). Secondly, the suggested solution will in
any event require a further 30-day notice period while the financial position of
the purchaser or the condition of the property, or both, may be deteriorating.

[17] The court a quo appears to have been of the view (para 20) that the
strict interpretation of s 19(2)(c) it subscribed to would not really impose an
additional burden on the seller, because, so the court reasoned, a party to a
contract who gives notice of his or her intention to cancel is in any event
required to give that notice in clear and unequivocal terms (see para 20 of the
judgment). I am unable to agree with this line of reasoning. The notice in
terms of s 19(2)(c) is not yet a notice of cancellation. If the purchaser should
fail to purge his or her default during the 30-day notice period, the seller will
clearly be required to make an election between the available remedies and to
convey that election to the purchaser in clear and unequivocal terms. The
point is, however, that on a strict interpretation of s 19(2)(c) these obligations
are imposed on the seller prior to the 30-day notice period which, in my view,
is indeed a substantial additional burden.

[18] Can this additional burden – and the concomitant inroad into the
seller's contractual rights at common law – be said to be imposed by the
express wording or to appear by necessary implication from the provisions of
s 19(2)(c)? The express wording of s 19(2)(c) clearly does not require an early
election by the seller.  It may, however, be understood to be required by
necessary implication if the notice allowed by the broad interpretation of the
section, ie a notice reserving the seller's right to elect at a later stage, would
be of no noteworthy benefit to the purchaser. This seems to be the argument
adopted by Page J in Miller (at 361G-362A). According to this argument mere
recital of the steps that the seller may possibly take after the 30-day notice
period, would serve no protective purpose. Since the remedies available to
the seller already appear ex facie the contract, so the argument goes, the
purchaser would derive no real assistance from being informed that the seller
intends to invoke one of these remedies if the breach of contract is not
rectified.

[19] I do not agree with this argument. Though it can be said that an early
election by the seller will be more advantageous to the purchaser, that is not
the question. The true question is whether a notice that informs a purchaser
that persistence in his or her breach will result in either cancellation or a claim

for payment of the full balance of the purchase price, can be said to serve no
real purpose at all. In Van Niekerk, Claassen J concluded (at 368C-E) that
such notice would serve the purpose of warning the purchaser that the seller
was not prepared to abide his breach any longer and that failure to remedy
the breach will lead to one of the drastic steps contemplated in s 19(1). I
agree with this view.

[20] I also agree with Claassen J that the broader interpretation of
s 19(2)(c) is supported by the wording of the section.  What the section
requires is 'an indication' of 'the steps' (plural) that the seller intends to take.
Apart from the fact that the dictionary meaning of 'indicate' tends to suggest a
notification of lesser exactitude, the plural 'steps' in my view supports the
perception that the seller need not elect a single step. He is allowed to
indicate an intention to take more than one step in the alternative. In Miller
Page J gave the following answer to this argument (at 364H-365A):

'Some significance was sought to be attached to the use of the plural "steps" and not "step". It
was contended that this showed that it was permissible to indicate an intention to take all the
steps enumerated in ss (1), albeit in the alternative. In my view the use of the plural does not
justify this conclusion, since each of the courses enumerated in ss (1) could comprise more
than one step'

[21] I do not find this answer convincing. If the plural 'steps' must be
understood to refer to the various actions included in each of the remedies
enumerated in subsec (1), a strict interpretation of s 19(2)(c) would in fact
require each of those actions – 'steps' – to be mentioned in the notice, which
would clearly be absurd. In short, if the legislature intended that the seller
should indicate which of the three options enumerated in subsec (1)(a), (b) or
(c) he intends to take, it could simply have said so. Though it is not necessary
to express a view on everything said in Van Niekerk, I agree with the
conclusion arrived at, namely that s 19(2)(c) allows a seller to indicate the
steps he intends to take in the alternative and that it does not require an
election between those alternative steps in the notice of demand.

[22] This brings me to the second objection against the notice contained in
the Bax letter, which was also upheld by the court a quo (paras 22 and 23).
What it amounted to, in essence, was that the letter referred only to the
alternative steps the seller would be entitled to take (in terms of the contract)
and not to any steps that the seller in fact intended to take as required by
s 19(2)(c). On a literal interpretation of the letter that, of course, is what it
says. If the notice is therefore required to follow the exact wording of
s 19(2)(c), the Bax letter would probably not make the grade.

[23] Does the answer to this difficulty lie in the notion endorsed in Van
Niekerk (para 26), that s 19(2)(c) is merely directory and that its non-
compliance can therefore be condoned? I do not believe so. In my view, the
provisions of the section are peremptory in the sense that a notice which
complies with the section is an essential prerequisite for the exercise of any
one of the remedies contemplated in s 19(1). But it has been accepted by this
court that, even where the formalities required by a statute are peremptory, it
is not every deviation from literal compliance that is fatal. Even in that event,
the question remains whether, in spite of the defects, there was substantial
compliance with the requirements of the statute. (See eg Unlawful Occupier,
School Site v City of Johannesburg 2005 (4) SA 199 (SCA) para 22; Moela v
Shoniwe 2005 (4) SA 357 (SCA) paras 8-12. See also, eg Maharaj v
Rampersad 1964 (4) SA 638 (A) 646C-E.)

[24] On a sensible interpretation of the Bax letter, the message it conveyed
is clear: if Engelbrecht should fail to purge his breach, Merry Hill would
exercise one of the alternative remedies set out in the letter, which would then
become available to it. Thus understood, the letter, in my view, complied in
substance - if not in exact form - with the requirements of s 19(2)(c). It follows
that the appeal must, in my view, succeed and I can see no reason – and
none was suggested by either party – why costs should not follow the event –
both in this court and in the court a quo.

[25] For these reasons:

(a)
The appeal is upheld with costs.
(b)
The order by the court a quo is set aside and replaced with the
following:

'The application is dismissed with costs.'

.......................
F D J BRAND
JUDGE OF APPEAL

Concur:

CAMERON JA
LEWIS JA
MAYA JA
THERON AJA
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

Case number:  323/06
In the matter between

MERRY HILL (PTY) LTD

APPELLANT

and

HENDRIK JOHANNES ENGELBRECHT
RESPONDENT

From:
The Registrar, Supreme Court of Appeal
Date:
2007-05-24
Status:
Immediate

In a judgment today, the SCA has eased the notice obligations resting
on sellers in instalment-sale agreements of land who wish to take action
against defaulting purchasers. This appeal turned on the interpretation
of s 19(2)(c) of the Alienation of Land Act 68 of 1981. Section 19
provides that a seller in terms of an agreement of sale of residential land
by instalments is not entitled to claim acceleration of the payment of the
instalments or to cancel the agreement, unless he or she has by written
notice demanded rectification of the breach by the purchaser within a
period of 30 days. Section 19(2)(c) then provides that the actual notice

must include an indication of the steps the seller intends to take if the
alleged breach of contract is not rectified within the notice period.

The dispute between the parties arose from an agreement of sale in
terms whereof Merry Hill – an East London-based company – sold two
residential erven in Cintsa, East London, to Mr Engelbrecht on
instalments. When Engelbrecht failed to pay some of these instalments,
Merry Hill purported to cancel the sale and then resold the erven.
Engelbrecht refused to accept the validity of the cancellation on the
narrow basis that Merry Hill's preceding notice of demand did not
comply with the Act. As a result he approached the Eastern Cape High
Court for an order interdicting Merry Hill from transferring the erven to
the subsequent purchasers. The High Court upheld Engelbrecht's
contentions regarding the invalidity of Merry Hill's purported cancellation.
Accordingly it granted the interdict sought with costs.

Merry Hill's notice of demand, which led to the central dispute, informed
Engelbrecht that if he should fail to rectify his breach by paying the
arrear instalment, Merry Hill intended to claim the full balance of the
purchase price, or, alternatively cancellation of the agreement.  Relying
on two earlier decisions of the High Court that were given about 20
years ago, Engelbrecht contended that the statute requires a seller to

state in the notice exactly which of the alternative steps he or she
intends to take upon expiry of the 30 day period.  Consequently,
Engelbrecht argued, a notice which stated these steps in the alternative
did not comply with the provisions of the section. In upholding
Engelbrecht's objection to Merry Hill's notice of demand, the High Court
endorsed the reasoning of the two earlier cases.

The SCA rejected Engelbrecht's interpretation of s 19(2)(c) as too
burdensome on the seller. On the contrary, it held that s 19(2)(c) does
not prevent a seller from reserving his or her election between
alternative remedies until after the 30 day notice period.  Consequently,
that a demand which indicates an intention to exercise one of the
alternative remedies which would become available to the seller after
the 30 day notice period, conforms with what the section prescribes and
that Merry Hill's cancellation was therefore valid. As a result, the appeal
was upheld with costs and the interdict granted by the High Court set
aside.