Pretoria East Builders

Division: The Supreme Court of Appeal
Case No: 574/2002
Date of hearing: 15 February 2004
Date of delivery: 29 March 2004
Coram: Brand JA, Jones AJA and Southwood AJA

Summary
On 29 March 2004 judgment was given in the Supreme Court of Appeal in an appeal from a decision given on 23 August 2002 by Webster J in the Pretoria High Court interdicting two Pretoria companies, Pretoria East Builders CC and Infogold Investments CC, from selling a Pretoria property, Erf No 6733, Woodlands Estate, Moreleta Park, Pretoria to anybody other than the respondent, and ordering them to give effect to a written agreement between the parties (1) by permitting the respondent to occupy the property immediately, and (2) by registering the property in his name.

The issue involved the enforceability of a contract for the sale of property belonging to somebody else. The respondent purchased the property from Pretoria East Builders CC for R890 000-00. However, the land was owned by Infogold Investments CC whose case is simply stated: it was the owner of the property; it was not a party to the sale; it is not bound by the sale; and it did not authorise Ms Badenhorst (the project manager of Pretoria Builders CC) to act for it as its agent, whether in the sale or for any other purpose. The counter-argument was that Infogold is bound to the sale as the undisclosed principal of its agent, Pretoria East Builders. The court found this counter-argument unsound.

It held that Infogold's knowledge, if it had such knowledge, that somebody else had sold its property would not be sufficient in the circumstances of this case for an inference that Infogold must have authorized the sale. The result is that whether or not it is permissible to hold an undisclosed principal to an agreement for the sale of land there is no evidence to show that the seller acted or was authorized to act on behalf of the alleged undisclosed principal. There is therefore no basis on which to hold that Infogold is liable to the respondent in terms of the agreement of sale.

Regarding the submissions made about the liability of Pretoria East builders, the court held that they were not liable to the respondent because no written agreement existed between them as required by section 2(1) of the Alienation of Land Act No 68 of 1981. It was not a contract of sale but a rejected counter-offer made by Pretoria Builders CC to sell the land to the respondent and to build a house on it.

Finally, the court found that Pretoria Builders CC could not be ordered to perform on the contract of sale, even if there was one, because Infogold refused to perform on Pretoria Builders CC's contract and sell the property. Thus an order for specific performance is futile and should not have been granted. An action for damages for breach of contract would have been a more appropriate remedy.

In the result, the appeal of both appellants was allowed with costs.

Full judgment