THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

JUDGMENT

Case no: 381/10
In the matter between:

Pangbourne Properties Limited

Appellant

and

Basinview Properties (Pty) Limited

Respondent

Neutral citation:
Pangbourne v Basinview (381/10) [2011] ZASCA 20 (17 March
2011)
Coram:

Lewis, Maya and Seriti JJA

Heard:

28 February 2011
Delivered:

17 March 2011
Summary:
Sale of land subject to suspensive condition: condition not fulfilled: sale
not revived by subsequent addendum that assumed sale to be valid: purchaser not
estopped from relying on non-fulfilment since none of requirements of estoppel
established.

_________________________________________________________________________
ORDER
_________________________________________________________________________
On appeal from: North Gauteng High Court (Pretoria) (Legodi J sitting as court of
first instance):
The appeal is upheld with costs. The order of the high court is replaced with:
‘The application is dismissed with costs.’
_________________________________________________________________________
JUDGMENT
_________________________________________________________________________
LEWIS JA (MAYA and SERITI JJA concurring)
[1] On 6 November 2007 the respondent, Basinview Properties Ltd (Basinview),
sold to the appellant, Pangbourne Properties Ltd (Pangbourne), its business of
letting immovable property. The business was defined to comprise certain
immovable property, fixed assets and leases in respect of the property. Office
buildings on the property were at the time let to two businesses. The purchase price
was R50 854 857.14, inclusive of VAT. The agreement provided that on transfer the
sum of R9 424 000 would be retained by the conveyancer nominated under the
agreement: if approval to develop a further office block on the property were not
obtained the amount retained would be repaid to Pangbourne. The amount of the
purchase price, coupled with the amount so retained, was an issue in the litigation
that ensued between the parties. The agreement was made subject to three
suspensive conditions, the fulfilment of one of which is the central issue in dispute.
[2] Pangbourne took the view that because one of the three conditions had not
been fulfilled timeously, the agreement was not binding on it. Accordingly, Basinview
applied to the North Gauteng High Court for an order that it was of full force and
effect and asked also for rectification of the purchase price so as to reflect the
payment of R9 424 000 as well. Legodi J granted the orders sought. The appeal

against his decision is with the leave of this court. Long after leave to appeal had
been granted, Basinview sought to cross appeal against the order in the event that
the appeal was dismissed. The high court granted leave to do so just two weeks
before the appeal was to be heard. Basinview sought condonation of the late filing of
the notice of cross appeal and heads of argument were filed a week before the
hearing. The cross appeal is conditional on the appeal failing.
[3] It should be noted that in the application to the high court, Pangbourne did not
answer the founding affidavit of Basinview, deposed to by Mr J Seeliger. Instead it
filed a notice in terms of Uniform Rule 6(5)(d)(iii) raising only questions of law.
Seeliger responded with a ‘supplementary founding affidavit’.
[4] I shall deal first with the dispute whether one of the conditions was fulfilled.
Should it be found that the condition was not fulfilled and that the agreement was
thus of no effect, the dispute about the price, and an application to rectify the
agreement, need not be decided.
[5] In so far as relevant, Clause 4 of the agreement stated:
‘Suspensive Conditions
4.1 This entire agreement . . . is subject to the fulfilment of the suspensive conditions that:
. . .
4.1.2 the Board of Directors of both the Purchaser and the Seller approve the purchase and
sale recorded herein. Proof of the passing of such resolution shall be furnished by each
party to the other in the form of a written resolution duly certified  by the chairman/secretary
as being a true copy of a resolution which was passed at the meeting for that purpose;
. . .
4.3 The suspensive conditions . . . have been inserted for the benefit of all parties and may
not be waived.’
Clause 4.4.2 provided that the condition relating to board approval ‘shall be fulfilled
within 14 (fourteen) days of the signature date’. Clause 4.5 provided that the parties
could, in writing, extend the dates of fulfilment, prior to those dates, by mutual
agreement. Clause 4.6 stated that, in the absence of such extension, if the
conditions were not fulfilled, then the agreement ‘shall never become of any force or

effect and no party shall have any claim against any other party’ save in the event of
a breach of clause 4, and that ‘the parties shall be restored to the status quo ante’.
[6] Pangbourne’s board of directors did not pass the resolution anticipated in
clause 4.2 within the 14-day period stipulated. This much is common cause.
Although the other conditions were fulfilled the effect of the failure of this condition
was, so Pangbourne argued, to render the entire contract of no effect. This is indeed
the general consequence of the failure of a condition: the contract has no legal
force.1
[7] The high court found, however, that although the agreement had lapsed it had
been ‘revived’. This was the implication of a written addendum to the agreement
concluded after the date for fulfilment had occurred. The high court also found for
Basinview on the ground that Pangbourne was estopped from asserting that the
agreement was a nullity. And it found that the fulfilment of the condition had been
waived despite the express prohibition on unwritten waivers in the agreement. In
refusing the application by Basinview for leave to appeal Legodi J said:
‘[I]t would offend against one’s sense of justice if, despite clear and unambiguous intention of
the parties, the general rule is applied. At the risk of repeating myself and contrary to the
rigid rule as proposed by Counsel on behalf of the respondent, a lapsed agreement due to
non-fulfilment of a suspensive clause, could be revived provided of course that the intention
to revive it spell out or can be implied, or can be seen to have been waived.’
[8] The facts relating to non-fulfilment, and to the addendum, are not in dispute.
Before the expiration of the 14-day period for fulfilment of the condition, on 15
November 2007, Pangbourne’s company secretary wrote to Basinview advising that
the chief executive officer of Pangbourne, Mr C Hutchison, who had authority to
approve the purchase price, had approved the agreement for the purchase of the
property. In the same letter she asked for proof of Basinview’s board approval.
[9] It subsequently transpired that Hutchison had exceeded the limit of his
authority. Nothing turns on this since it is clear that Hutchison in any event did not
constitute the board and that there was in fact no board approval. Basinview

1 The proposition is trite and repeated in many decisions. The most recent statement of this court to
this effect is in Fairoaks Investment Holdings (Pty) Ltd v Oliver 2008 (4) SA 302 (SCA) paras 20 and
21.

contended in the high court, however, that Pangbourne was bound by the letter of 15
November on the basis of the Turquand rule: that although Pangbourne had not
followed its own internal procedures, third parties could not be expected to take
cognizance of that and were entitled to rely on what is communicated to them by the
company.
[10] The court below made no finding in this regard but did not reject the
argument. The invocation of the Turquand rule is in my view inapposite. Pangbourne
communicated quite clearly to Basinview, through the company secretary, that
Hutchison (rather than the board) had approved the purchase. This is not a case
where internal procedures were not followed, unbeknown to third parties. Basinview
actually knew that there was no board resolution as required by the agreement. The
point was not pursued on appeal.
[11] Basinview argued before this court that the agreement was binding on the
basis of estoppel. Alternatively it contended that a new agreement had been entered
into when the parties signed an addendum to the agreement on 19 June 2008. I shall
deal first with the argument based on estoppel.
Estoppel
[12] The high court appeared to find (saying that the ‘cumulative events or conduct
. . . should justify a finding  . . . on estoppel’) that Pangbourne was estopped from
denying the validity of the agreement. The basis for this was the conduct of
Pangbourne’s officers, and their correspondence after the agreement and the
addendum respectively were signed. On appeal Basinview argued only that the letter
from the company secretary on 15 November 2007 formed the basis for finding that
Pangbourne was estopped from asserting that the condition was not fulfilled and that
the agreement was not binding.
[13] It should be noted that clause 19.3 of the agreement provided that:
‘No extension of time or waiver or relaxation of any of the provisions or terms of this
agreement  . . . shall operate as an estoppel against any party in respect of its rights under
this agreement . . . .’

Basinview argued that this provision did not exclude the operation of estoppel since
it was not contending for any extension of time, waiver or relaxation of a term of the
agreement. Instead it relied on a misrepresentation made by Pangbourne in the
letter written by the company secretary. That letter constituted the misrepresentation.
Part of the heading of the letter referred to ‘approval by Pangbourne’s board of
directors referred to in clause 4.1.2 of the agreement’.  The second and third
paragraphs read:
‘I confirm that the purchase price of the Property in the sum of R50 854 857,14 falls within
the authorization limit for approval of a purchase by Craig Hutchison, in his capacity as Chief
Executive Officer, in terms of Pangbourne’s policies and procedures.
I accordingly confirm, in my capacity as Company Secretary of Pangbourne, that the
purchase of the Property has been approved by Craig Hutchison.’
[14] This, contended Basinview, amounted to a representation that there was
board approval – a general authority for Hutchison to approve the purchase. It did
not matter that in fact the price exceeded his general authority. Basinview had
reasonably relied on the representation to its detriment.
[15] The requirements for an estoppel to operate are well known. A representation
made by a principal, not an agent, by words or conduct in such a way that the
principal would expect someone to rely on it; reasonable reliance on the
representation by the person relying on the representation; and consequent
prejudice to that party.2
[16] In my view, the letter made no misrepresentation that the condition had been
fulfilled, and Basinview could not reasonably have relied on it in believing that the
board had passed the requisite resolution. The agreement in clause 4.1.2 expressly
required a resolution of the board approving the particular sale – not a general
resolution giving an officer of the company authority for acquisitions for less than a
specified amount. And proof of the specific resolution, ‘duly certified by the
Chairman/Secretary of the Company’ had to be furnished to Basinview. The letter did
not say that the board had resolved to approve the agreement. It said that Hutchison

2 See NBS Bank Ltd v Cape Produce Co (Pty) Ltd  2002 (1) SA 396 (SCA) para 26, cited in Glofinco v
Absa Bank Ltd t/a United Bank 2002 (6) SA 470 (SCA) para 12.

had approved it. And there was indeed no resolution (as Basinview now accepts)
and thus no proof of it as required.
[17] There was therefore no representation that the condition had been fulfilled.
And accordingly there was no reliance to its detriment by Basinview on the fact that
the agreement had become unconditional. The requirements for estoppel to operate
such that the agreement was enforceable against Pangbourne were not met.
[18] It is thus not necessary to deal with Pangbourne’s contention that estoppel is
in any event a shield of defence and not a weapon of attack – a principle questioned
recently by Harms DP in Oriental Products v Pegma 178.3 The finding by the high
court that Pangbourne was estopped from asserting the nullity of the agreement was
clearly wrong.
The addendum constituted a new agreement
[19] Basinview contended in the alternative that an addendum that the parties had
signed on 19 June 2008 constituted a new agreement between the parties. Legodi J
found that the addendum ‘revived’ the agreement and he added some tacit terms. A
glance at the agreement suggests that the addendum had a completely different
purpose and effect.
[20] The parties recorded that in terms of clause 27 of their agreement
Pangbourne had appointed another entity, Bridgeport Property Administration (Pty)
Ltd (Bridgeport), to manage the buildings on the property sold. They stated,
however, that they had agreed that Bridgeport would not be required to manage the
property, and thus deleted clause 27. The addendum continued: ‘Save for the
amendment set out above, the Agreement remains of full force and effect’.
[21] This, argued Basinview, as I have indicated, amounted to a new agreement
for the purchase of the property, on the same terms (with the necessary changes
being made to dates) as the initial agreement. The logic defies me. The addendum
was recorded to have been made for the purpose of deleting clause 27. It stated that
the remainder of the agreement continued in effect. That must include the conditions.
There is not a shred of evidence that the addendum (usually something to be added

3 (126/10) [2010] ZASCA 166 (1 December 2010) para 31.

to an agreement) was intended to replace the agreement. And the contention runs
counter to the terms of the addendum itself.
[22] Nonetheless Basinview argued that the addendum had to be read against the
factual matrix in which the parties operated. They knew that the condition had not
been fulfilled, yet they stated that the sale agreement remained of full force and
effect. That must have meant that they intended to enter into a new contract on the
same terms save that the clauses of the contract of November 2007 dealing with
signature, effective dates and fulfilment of conditions had to be changed in the light
of the later date of agreement.
[23] The argument is far-fetched. It requires one to ignore altogether the language
of the addendum and to assume a false fact. Pangbourne, certainly, was not under
the impression that the condition had not been fulfilled. In a round robin resolution
dated 27 June 2008 the board of directors recorded that it had received legal advice
that Pangbourne was bound by the agreement, despite the absence of a mandate on
the part of the ‘previous managing director’, because of the provisions of s 36 of the
Companies Act 61 of 1973, called by them the ‘ultra vires rule’. The resolution
continued to state that the board now ratified the agreement as a result of a request
by the attorneys who were to effect transfer. The resolution thus shows that there
was no assumption that the agreement was not binding. Accordingly the factual
matrix indicates that the addendum was just that: an alteration in one minor respect
of what was assumed to be a valid contract.  And that is confirmed by the words at
the end that state that the agreement remained of full force and effect.
[24] The high court was thus wrong in finding that the addendum ‘revived’ the
agreement for the sale of the property by Basinview to Pangbourne, with tacit terms
read in as to the dates of signature, and dates for the fulfilment of the conditions.
And Basinview’s argument that it actually constituted a new agreement on the same
terms (more or less) likewise is untenable. The high court also erred in finding that
the parties had waived the fulfilment of the condition since the alleged waiver was
not only precluded by the express terms of the agreement but also occurred after the
date by which the condition should have been fulfilled. Basinview did not persist in its
argument in this regard on appeal. It also did not persist with the argument that
certain tacit terms had to be read into the addendum.

[25] In my view there was no basis on which to find that the agreement was
enforceable.  Thus it is not necessary to consider the claim for rectification nor the
conditional cross appeal. (Nor is it necessary to consider the application for
condonation of the late filing of the notice of cross appeal.) The appeal must
succeed.
[26] The appeal is upheld with costs. The order of the high court is replaced with:
‘The application is dismissed with costs.’

____________
C H Lewis
Judge of Appeal

APPEARANCES:

APPELLANTS:

P N Levenberg  SC

Instructed by  Bowman Gilfillan Inc

Johannesburg

McIntyre & Van der Post

Bloemfontein

RESPONDENTS:

N G P Maritz  SC

Instructed by Van der Merwe Du Toit

Pretoria

Symington & De Kok

Bloemfontein
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

PRESS RELEASE
17 MARCH 2011
STATUS: Immediate

Pangbourne v Basinview (381/10) [2011] ZASCA 20 17 March 2011)

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

The Supreme Court of Appeal today upheld an appeal against a judgment of
the North Gauteng High Court which had found that a written contract for the
sale of land was enforceable despite the fact that it had been subject to a
suspensive condition that had not been fulfilled. The high court found that a
subsequent addendum to the contract, entered into after the date for
fulfillment had occurred, ‘revived’ the contract. The addendum expressly
purported to delete only one clause of the contract, which it stated otherwise
remained of full force and effect.

The SCA held that the purpose of the addendum was not to revive the lapsed
contract. The parties had clearly thought it was still valid. They had
accordingly not intended to revive it nor to enter into a new contract on similar
terms. The initial contract was thus of no effect and could not be enforced
against the purchaser.
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