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Merry Hill

6 July 2006

In the judgement of Engelbrecht v Merry Hill (Pty) Ltd and Others which was delivered in the Eastern Cape High Court on 11 January this year, the purpose of section 19(2)(c) of the Alienation of Land Act 68 of 1981 was restated, namely to provide reasonable protection to a purchaser of land, as was the peremptory nature of the notice envisaged therein.

The point in issue was whether, when the first respondent purported to cancel the sale of the properties to the applicant, he complied with s 19(2)(c) of the Alienation of Land Act 68 of 1981. This section requires a seller of immovable property who decides to take action consequent upon a breach of contract by the purchaser to furnish, in the notice required by s 19, 'an indication of the steps the seller intends to take if the alleged breach of contract is not rectified'.

Engelbrecht (the purchaser) paid a certain amount of the instalments due but later fell into arrears. His explanation was that an employee of his was to blame and that he knew nothing about the breach of the agreement nor about the official notification from the attorney acting on behalf of the first respondent in which he wrote:
'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 in the sum of R22 534.00 at our offices at the above address 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.'

The court made the following observations about section 19:

  1. It puts an obligation on the seller which must be met.
  2. The intention of the section is to protect the seller in contracts that usually involve substantial amounts of money.
  3. The section requires a 'clear and unequivocal' notice of intention to cancel the contract;
  4. The notice must not consist of a hint or a suggestion as to the consequences of failure to remedy the breach.
  5. In affording the purchaser a reasonable measure of protection the seller must also make the election at an early stage. It need not be final and binding but rather an indication of what he or she intends to do about the breach. If he or she decides to follow a different route then further notice must be given to this effect.
  6. The notice is not invalid if it does not disclose an election but rather mentioned the steps that were possible in terms of the applicable provision of the contract. The purpose of an election being made was spelt out clearly by Page J in Miller v Hall 1984 (1) SA 355 (D), i.e to enable the purchaser 'realistically to appraise the consequences of the various courses open to him' and that '[h]e will undoubtedly be able to do this more effectively if he knows precisely what consequences will ensue if he persists in his breach than if he is unaware of which of the several courses open to him the seller proposes to adopt'.

The court consequently found that its application of its interpretation of section 19 to the facts of the case was that … "no indication was given to the applicants of the steps that the first respondent intended to take pursuant to the applicant's breach of their contract, as required by s 19(2)(c) of the Act, and that, as a result, the notice was invalid."

Full judgement



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