THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Not Reportable
Case no: 20714/14

In the matter between:

LORRAINE DU PREEZ

APPELLANT

and

TORNEL PROPS (PTY) LTD
RESPONDENT

Neutral citation: Du Preez v Tornel Props (Pty) Ltd (20714/14) [2015]
ZASCA 134 (29 September 2015)

Coram:
Shongwe, Saldulker, Swain, Mbha JJA and Baartman AJA

Heard:
26 August 2015

Delivered: 29 September 2015

Summary: Contract – justifiable withholding of reciprocal obligation to
perform – reasonable person not perceiving conduct as repudiation – subsequent
cancellation reasonably perceived by innocent party as repudiation – ensuing
cancellation justified – quantum of damages awarded not proved – court re-
assessing damages.

ORDER
________________________________________________________________

On appeal from: North Gauteng High Court, Pretoria (Kollapen J sitting as
court of first instance):
1 The appeal is partly upheld.
2 The order of the court a quo is set aside and is replaced with the following:
„(1) The defendant is ordered to pay the plaintiff the sum of R104 817.
(2) The defendant is ordered to pay interest thereon from 1 June 2007 to date of
final payment at the rate of 15.5% per annum.
(3) The defendant is ordered to pay the costs of the action.
(4) The defendant‟s counter-claim is dismissed with costs‟.
3 The application for condonation is granted and the appellant is ordered to pay
the costs of the application on the opposed party and party scale.
4 The appellant is ordered to pay the costs of the appeal.

JUDGMENT
________________________________________________________________

Shongwe JA (Saldulker, Swain and Mbha JJA and Baartman AJA
concurring)
[1] The central issue to be decided in this case is whether the contractor,
Tornel Props (Pty) Ltd (plaintiff in the court a quo) was justified in withholding
performance and thereafter cancelling the contract between it and the employer
Ms Lorraine Du Preez (defendant in the court a quo). I shall refer to the parties
as the plaintiff and defendant as they were referred to in the trial court. The
appeal is with the leave of the trial court.

[2] The dispute arose out of a building contract entered into by the defendant
and Jonker Projekte CC (Jonker CC) on 10 November 2006. At all material
times, the defendant had been the owner of Erf 4358, The Heads, Lydenberg,
Mpumalanga Province. Jonker CC undertook to build a residential house on the
aforesaid erf in accordance with the building plans attached to the building
contract. The contract price was R1 million inclusive of VAT. It was a term of
the agreement that the defendant undertook to pay the contract price in
scheduled progress payments as and when certain phases of the works were
completed. The payments would be made in cash after approval by an inspector
or valuer.

[3] The building works commenced and the defendant paid a sum of R80 000
to Jonker CC as part of the scheduled progress payments. It is common cause
that in November 2006 Jonker CC was liquidated. Subsequently, the plaintiff
(represented by Mr Cassim) offered to purchase the sole right to complete the
partially finished construction from Jonker CC (in liquidation). The offer not
only referred to the building works of the defendant but included other projects
undertaken by Jonker CC. The offer was accepted – the agreed amount was paid
to the liquidators.

[4] In December 2006 the plaintiff and the defendant concluded a partly
written and partly oral agreement. The written portion of the agreement was the
building contract and annexures – which was originally concluded by the
defendant and Jonker CC. It was expressly, alternatively tacitly or impliedly
agreed inter alia that the contract price would be R920 000 (nine hundred and
twenty thousand rand); that the plaintiff would complete the works in
accordance with the building plans and specifications, and that the defendant

would pay the full contract price in scheduled progress payments as and when
certain phases of the works were completed – after approval by an inspector or
valuer. The plaintiff proceeded with the building works. It appears that during  a
December 2006 meeting, the plaintiff raised the question of VAT being
excluded from the contract price. The defendant rejected the suggestion and
insisted that the terms of the contract price included VAT. The defendant denied
there was any discussion regarding progress payments, although the building
contract provided for this.

[5] During March 2007 the plaintiff presented an invoice for a progress
payment in the amount of R240 000 to the defendant. As a result on 16 April
2007, the defendant‟s attorneys wrote to the attorneys representing the
liquidators requesting approval from the liquidators to make this progress
payment to the plaintiff. On 26 April 2007, new attorneys appointed to attend to
the liquidation confirmed that the defendant could make the progress payment.
However, no payment was made. It is clear that at this stage the defendant‟s
attorneys accepted the defendant‟s obligation to make progress payments in
terms of the contract.

[6] Because this invoice was not paid, the plaintiff cancelled it and on 10
May 2007 sent another invoice to the defendant requesting payment of
R600 000 plus VAT totalling R684 000. The invoice also contained a proviso
that payment must be made within three working days from date of invoice,
failing which the plaintiff would stop the building works – because of cash flow
problems. Discussions between the parties continued – they included, inter alia,
whether the plaintiff was obliged to construct the swimming pool, the paving
and the balustrades. The defendant‟s stance was that the plaintiff was obliged to

carry out this work in terms of the contract. Notwithstanding these disputes the
building works continued.

[7] On 24 May 2007, the defendant‟s new attorneys (JC Marnewick) in
response to the invoice of 10 May 2007 wrote to the plaintiff confirming the
contract price as R1 000 000 but said that payment was only due and payable
upon completion of the building works.  This was contrary to the provisions of
the contract. The letter also advised that, should the plaintiff stop the building
works, this would be tantamount to repudiation.  The stance of the defendant
accordingly was that no progress payments would be made.

[8] On 29 May 2007 the plaintiff‟s attorneys replied confirming the contract
price of R1 million but maintained it excluded VAT. The letter alleged that the
parties orally agreed that the plaintiff was not obliged to build the out-buildings,
the paving, swimming pool and the balustrades. It referred to the first invoice
rendered by the plaintiff for payment of R240 000 which was not paid by the
defendant.  It was alleged that approximately 70 per cent of the house had been
completed, despite no payment having been made by the defendant. A further
demand was made for payment of the sum of R600 000, on or before 12 noon
on 1 June 2007, failing which the plaintiff would cease building and summons
would be issued. The defendant‟s attorneys replied on 1 June 2007 disputing
that the plaintiff was not obliged to construct the specified items and stating that
if the plaintiff ceased building, it would be interpreted as a repudiation of the
contract by the plaintiff.

[9] The response by the plaintiff‟s attorneys by letter dated 7 June 2007 was
that it was clear that the defendant did not intend to make any payment at that
stage, and advising that no further building would be carried out until payment
as demanded was made. This elicited a response from the defendant‟s attorneys
by way of a letter dated 15 June 2007, in which it was recorded that the refusal
to continue building constituted a repudiation by the plaintiff, which was
accepted by the defendant and the contract was allegedly cancelled.

[10] It should be noted that the refusal by the defendant to make payment of
the amount claimed by the plaintiff of R600 000 was not based upon the failure
by the defendant to have this amount approved by an inspector, or valuer. The
refusal was based solely upon the defendant‟s contention that no payment
would be made until the house was complete, contrary to the express terms of
the agreement. If the defendant had tendered to make a progress payment,
provided its value had been approved by an inspector or valuer in terms of the
contract, the outcome would have been entirely different. It is also quite clear
from the correspondence that the peripheral dispute between the parties as to
whether the plaintiff was obliged to build the disputed items, and whether VAT
was included in the contract price, did not cause the termination of their
contractual relationship.

[11] The plaintiff accordingly issued summons against the defendant claiming
damages on the basis that the defendant breached the contract, alternatively
repudiated it by failing to make progress payments. In the result, the plaintiff
alleged it had cancelled the contract. In the alternative, the plaintiff accepted the
repudiation of the contract by the defendant and cancelled the agreement, and
claimed contractual damages suffered in the sum of R765 300 in respect of the

contract price excluding VAT. In the further alternative, plaintiff claimed the
sum of R636 500 in the event it was found that the contract price included VAT.
The difference in both respects between the amount claimed and the contract
price was alleged to be the costs that would be saved by the plaintiff in not
completing the building works, in the amount of R283 500.  This amount was
based upon an estimate provided by the defendant‟s attorney in the letter of 24
May 2007 referred to above. This amount purported to be the costs saved by the
plaintiff in not completing the works, plus an additional amount of R50 000
being an estimate of any additional fair and reasonable costs that would be
saved by the plaintiff as a result of not completing the works.

[12] The court a quo concluded that the plaintiff‟s conduct in ceasing building
work did not constitute a repudiation of the agreement. It further decided that
the defendant‟s refusal to make a progress payment, which was a material term
of the contract, constituted a breach of the agreement. This breach, the court a
quo reasoned, entitled the plaintiff to cancel the contract and claim damages. As
will be seen, the court a quo incorrectly categorized the legal nature of the
conduct of the respective parties. As regards the quantum of the plaintiff‟s
damages, the court a quo relied upon a quotation prepared by Neobuild building
contractors, which the defendant attached to her counterclaim in support of her
assertion of the respects in which the defendant alleged the building was not
completed and defective, as well as the cost of completing the building in
accordance with the agreement. It is common cause that no expert evidence
however was led to prove the Neobuild quotation, as the defendant never led
this evidence. As will be seen, the court a quo erroneously relied upon this
evidence, classifying it as the best evidence available when it was no evidence
at all.

[13] On appeal, the defendant challenged the order of the court a quo on the
following basis:
(a)  the plaintiff repudiated the agreement by denying that the agreed price
included VAT;
(b) the plaintiff repudiated the agreement by refusing to build the pool,
balustrades, paving, garage and servants‟ quarters;
(c) the plaintiff did not prove that progress payments had to be made in terms
of the agreement;
(d) even if progress payments had to be made, it was never proved that the
invoice for R600 000 had been approved by a valuer or inspector.
In the result, it was submitted any obligation upon the defendant to make a
progress payment was suspended during the plaintiff‟s repudiation of the
agreement.

[14] As pointed out above, it is clear from the exchange of correspondence
between the parties‟ attorneys which preceded the purported cancellation by the
defendant, that the conflict between the parties as to the obligation upon the
plaintiff to construct the disputed items, as well as whether VAT was included
in the contract price, did not cause the termination of the parties contractual
relationship. Although the plaintiff clearly attempted to get the defendant to
agree that he was not obliged to build these items and that VAT was not
included in the price, these disputes did not cause the plaintiff to cease building
the house. It is quite clear that the decision by the plaintiff to cease building
culminated in the termination of the contract. The plaintiff took this decision
because the defendant refused to make payment of any amount until the house
was complete. The defendant‟s refusal to make any payment at all until the
house was complete, as set out in the letter dated 24 May 2007, it seems was

motivated by the fear that the plaintiff would not complete the house. Be that as
it may, this did not entitle the defendant in the face of the express wording of
the contract, to refuse to make any payments until the house was complete. The
safeguard in the contract for the defendant lay in insisting that any claim for a
progress payment be approved by a valuer or inspector.

[15]  It is therefore clear that the defendant never proved that she relied upon
the plaintiff‟s alleged repudiation of the agreement, in refusing to build the
disputed items and maintaining that VAT was included in the contract price, as
justification for cancelling the agreement. It is clear from the defendant‟s
attorneys‟ letter of cancellation of the 15 June 2007 that the act of repudiation
on the part of the plaintiff, relied upon by the defendant to justify cancellation,
was the refusal by the plaintiff to continue building. The other issues, although
complained of, were never relied upon as acts repudiation by the defendant.

[16] As regards proof by the plaintiff that the defendant was obliged to make
progress payments, even if it is assumed in favour of the defendant that
annexure D to the agreement, which set out the stages when progress payments
had to be made, never formed part of the agreement, clause 2.1 makes the
defendant‟s liability to make these payments clear. As regards the plaintiff‟s
failure to prove that the invoice for R600 000 had been approved by an
inspector or valuer, it is clear that the defendant never refused to make payment
on this basis.

[17] The central issue accordingly is whether the refusal by the plaintiff to
continue building was legally justified or whether it amounted to a repudiation
which entitled the defendant to cancel the contract. The test for repudiation is
objective and not subjective.  The test as to whether conduct amounts to
repudiation of a contract is whether fairly interpreted, it exhibits a deliberate

and unequivocal intention no longer to be bound by the terms of the contract
(Street v Dublin 1961 (2) SA 4 (W) at 10B and Van Rooyen v Minister van
Openbare Werke en Gemeenskapsbou 1978 (2) SA 835 (A) at 845A-C in which
case Rabie JA referred with approval to statements made by Williamson J in
Street v Dublin (above). See also OK Bazaars (1929) Ltd v Grosvenor Buildings
(Pty) & another 1993 (3) SA 471 (A). Whether the plaintiff‟s conduct was
legally justified requires a determination of whether the plaintiff was entitled to
withhold this performance. It is clear that the defendant was obliged to make
progress payments and the reciprocal obligation upon the plaintiff to continue
building was dependent upon the performance by the defendant of this
obligation.

[18] Simply put the failure to comply with the terms and conditions of the
contract by the defendant in not making progress payments as agreed, entitled
the plaintiff to withhold its reciprocal obligation to continue building the house.
The defendant‟s objectively unjustifiable conduct in treating this as a
repudiation of the agreement and purporting to cancel the agreement,
objectively assessed amounted to a repudiation which the plaintiff accepted and
justifiably cancelled the agreement. In Datacolor International v Intamarket
(Pty) Ltd 2001 (2) SA 284 para 1, Nienaber JA, observed that:
„Repudiation has sometimes been said to consist of two parts: the act of repudiation by the
guilty party, evincing a deliberate and unequivocal intention no longer to be bound by the
agreement, and the act of his adversary, “accepting” and thus completing the breach‟.
In addition as pointed out at 294E-H:
“The emphasis is not on the repudiating party‟s state of mind, on what he subjectively
intended, but on what someone in the position of the innocent party would think he intended
to do; repudiation is accordingly not a matter of intention, it is a matter of perception. The
perception is that of a reasonable person placed in the position of the aggrieved party. The
test is whether such a notional reasonable person would conclude that proper performance (in
accordance with a true interpretation of the agreement) will not be forthcoming. The inferred

intention accordingly serves as the criterion for determining the nature of the threatened
actual breach.”
On the evidence a reasonable person placed in the position of the plaintiff, faced
with the refusal by the defendant to make any progress payments, would
conclude that proper performance would not be forthcoming, which would
justify cancellation of the agreement. The plaintiff however, as it was entitled
to, elected at this stage not to cancel the agreement but rather to withhold its
reciprocal obligation to continue building the house. A reasonable person in the
position of the plaintiff would have concluded, from the defendant‟s subsequent
response, being the purported cancellation of the contract by the defendant, that
no further performance would be forthcoming, entitling the plaintiff thereafter
to cancel the contract. It is therefore clear that the contractual bond that existed
between the parties was justifiably severed by the plaintiff. The law accordingly
provides compensation for the innocent party being in this case the plaintiff.

[19] The court a quo, in my view, albeit arriving at the correct conclusion
incorrectly analysed the sequence of events between the parties as follows:
„defendant‟s stance in refusing to make payments would in my view constitute a breach of
contract which then would have the result that the plaintiff was entitled to cancel the contract
as it did on account of the defendant‟s conduct. … In my view the plaintiff was entitled to
consider the defendant‟s failure to pay as a breach of contract and was accordingly under
those circumstances entitled to stop further work on the dwelling house of the defendant in
the light of such refusal to pay and in the light of the breach of the agreement by the
defendant‟.
In view of my conclusion that the defendant repudiated the agreement by
purporting to cancel the agreement – leading to its cancellation by the plaintiff,
it is not necessary to deal with the merits of the counterclaim. It stands to be
dismissed.

[20] I now turn to deal with the quantum. As pointed out the court a quo
erroneously relied on a quotation prepared by Neobuild Building Contractors,
annexed by the defendant to her counterclaim. Mr Soomar, an expert called by
the plaintiff simply used this quotation without verifying the correctness
thereof. The purpose of the quotation was to give an indication of costs the
defendant would have to incur to complete the work, and not to give an
indication of costs saved by the plaintiff. The contents of this quotation cannot
be viewed as evidence placed before the court a quo because Neobuild was not
called to give evidence to prove its contents. As pointed out the court a quo
misdirected itself in this regard, describing this as the best evidence available
when it was no evidence at all. This court is therefore at large to interfere with
the award granted by the court a quo.

[21] Counsel for the plaintiff before us conceded that the plaintiff will not do
better than to recover damages in the sum of R104 817, which amount was
calculated and arrived at by Mr Botes upon the request of the defendant. The
purpose was to calculate what the plaintiff would be entitled to for the work
done considering all the uncompleted work. Counsel for both parties agreed that
the sum of R104 817, as calculated by Mr Botes was justifiable – in the event
that this court found that the plaintiff had justifiably cancelled the agreement.

[22] I turn to the issue of the costs of the appeal. Although the defendant has
been successful in the reduction of the amount awarded to the plaintiff from
R434 746, 46 to R104 817 it has nevertheless been unsuccessful on the merits.
It was the defendant‟s unjustifiable conduct in refusing to make any progress
payments, despite the clear wording of the agreement, which brought the
contractual relationship to an end. In the light of the evidence I do not regard
this as substantial success sufficient to entitle the defendant to an award of the

costs of appeal in her favour. The defendant must accordingly pay the costs of
the appeal.

[23] I now deal with the condonation application for failing to lodge with the
Registrar, six copies of the record of the proceedings as prescribed by rule 8 of
the rules of this court. Because of the importance of the matter to the parties and
in the interest of justice, I am of the view that condonation be granted with costs
on the opposed party and party scale. The default by the defendant and her
attorneys does not warrant a punitive costs order.

[24] For the above reasons the following order is made:
1 The appeal is partly upheld.
2 The order of the court a quo is set aside and is replaced with the follow:
„(1) The defendant is ordered to pay the plaintiff the sum of R104 817.
(2) The defendant is ordered to pay interest thereon from 1 June 2007 to date of
final payment at the rate of 15.5% per annum.
(3) The defendant is ordered to pay the costs of the action.
(4) The defendant‟s counter-claim is dismissed with costs‟.
3 The application for condonation is granted and the appellant is ordered to pay
the costs of the application on the opposed party and party scale.
4 The appellant is ordered to pay the costs of the appeal.

______________________

J B Z SHONGWE

JUDGE OF APPEAL

Appearances

For the Appellant:
J L Bergenthuin SC with him C A L Korf

Instructed by:

Ernst J.V. Penzhorn Attorneys, Pretoria;

Hill, McHardy & Herbst Inc., Bloemfontein.

For the Respondent:
Q Pelser SC

Instructed by:

Döman Weitsz Attorneys, White River;

Christo Dippenaar Attorneys, Bloemfontein.