Division: Supreme Court of Appeal
Coram: Heher, Ponnan JJA, Hurt, Tshiqi et Wallis AJJA.
Heard: 25 August 2009
Delivered: 18 September 2009
Rockbreakers and Parts (Pty) Ltd. v Rolag Property Trading (Pty) Ltd. (498/08) [2009] ZASCA 102
In this judgment, the Supreme Court of Appeal upheld an appeal against the judgment of the Johannesburg High Court which granted an order for specific performance of a purchase and sell agreement between Rockbreakers (the appellant) and Rolag (the respondent). A written offer to purchase land (still to be subdivided) was signed on behalf of Rolag. The dispute arose when a representative of Rockbreakers signed, he inserted the following words in manuscript:
"This offer is accepted subject to the seller obtaining registration of the subdivision of the property."
The manuscript insertion was neither initialled nor countersigned by the respondent. Apart from the manuscript insertion there is no reference to a subdivision of the property in the agreement, although the evidence shows that both parties were aware of the need for the property to be subdivided in order to give effect to the sale.
Rockbreakers did not proceed with the registration and transfer process and took the stance that the offer to purchase was not accepted unconditionally by Rockbreakers. Rolag applied to the Johannesburg High Court for an order for specific performance of the agreement and the application was successful.
On appeal per Tshiqi, the defence was that the manuscript insertion was material to any agreement and constituted a counter-offer which had to be in writing and signed by or on behalf of the parties in compliance with s 2(1) of the Alienation of Land Act 68 of 1981 ('the Act'), and that the failure by the respondent to accept it or signal its acceptance in writing rendered the contract unenforceable. The respondent disputed that the manuscript insertion amounted to a counter-offer and contended that it was surplusage amounting to no more than what was the common intention of the parties. The basis for this contention is that both parties knew that the property had to be subdivided in order to give effect to the agreement.
After citing a number of authorities - Johnson v Leal, Meyer v Kirner and others with regard to the legal effect of the predecessors of s 2(1), he concluded that if the manuscript insertion embodied a material alteration to the contractual terms and thus constituted a counter-offer that was never accepted in writing, then the contract would be unenforceable, which was the case. Since the contract as initially signed by the respondent made no mention of subdivision, and the fact that subdivision would materially affect the obligations of the appellant, there is therefore no doubt in the circumstances of this case that the manuscript insertion is material and amounted to a counter-offer. As it was not accepted by the respondent no binding agreement was therefore concluded between the parties.
In his concurring judgment, Wallis AJA extended the reasoning of Tshiqi in an analysis of the legal consequences which would flow from the contract being subject to the suspensive condition and not being subject to it as a result of an express or tacit term of the contract. Here there was no indication that "the parties foresaw any possible problems in obtaining sub-divisional approval or, until Mr Esprey inserted the additional clause, that they contemplated the possibility that such approval might not be forthcoming. In those circumstances it is not possible to draw the inference that if the matter had been raised at the outset they would have agreed that in the event of sub-division not being procured the contract would simply have fallen away." A further relevant factor is that a tacit term is not lightly to be imputed to parties who have chosen to embody their agreement in writing since they have thought about its terms when writing them up in the document.
Full judgment
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