Unitrans Motors (Pty) Ltd ("U") bought a property in Sandton from Knight Street Proper (Pty) Ltd ("K") and the agreement stipulated that K was obliged to fill and level an area of embankment so as to turn it into "usable space, fit for construction on it, free from the risk of subsidence".
After transfer of the property, U discovered that the "filling" and "levelling" was defective and unstable and that the area was not usable space for construction on it free from the risk of subsidence.
U wrote a letter of demand to K in terms of the breach clause, clause 14, of the contract and then sued K for about R2.5 million in damages.
K raised three defences:
- That on a proper construction of the breach clause (clause 14.1), the plaintiff is not entitled to sue for damages in lieu of specific performance without having cancelled the agreement.
This clause reads:
"If the SELLER or the PURCHASER fails within 7 (seven) days of the giving of a written notice in the manner set out in clause 14 to carry out any of the terms and conditions of this agreement, the SELLER or PURCHASER may sue the defaulting party for specific performance, or alternatively cancel the sale without prejudice to any rights which the SELLER or the PURCHASER may have in law."
- That U failed to make proper demand as required by 14.1, and
- That the claim arising from defects to the filling and levelling had actually been settled by the parties.
As regards defence 1 - the court said a proper construction does not preclude the claiming of damages. It further rejected defence 2 - stating with reference to the facts that due demand has been given. The court also dismissed defence 3 - saying that with regard to renewal work done by K (but not effective), that the facts do not indicate settlement and abandonment of rights or a new agreement.
Moral of the story for conveyancers:
Draft contracts carefully, especially unusual conditions and breach clauses; reserve rights while conducting negotiations.
Igqwetha Training Academy (Pty) Ltd