Division: High Court (Cape of Good Hope Provincial Division)
Reported as: Waller and Another v Pienaar and Another 2004(6) SA 303(C)
Case No: 5434/2001
Date of delivery: 27 May 2004
Coram: Erasmus, J
Plaintiffs sued Defendants in two alternative claims after buying a house from Defendants which they claim had certain latent defects which were not disclosed by the Defendants at the time of sale. The alleged defects include:
* Poorly compacted filling;
* A cracked gable wall;
* The failure of internal walls;
* Inadequate foundations.
Plaintiffs averred that despite the "voetstoots" clause the Defendants "had a duty to disclose … the existence of the latent defects in the property of which they were aware at the time of the sale …" The matter therefore concerned the common law application of the aedilitian remedies in respect of the latent defects affecting the purpose for which a thing is sold. As Silke J set out in Knight v Trollip 1948(3) SA 1009 at 1013: "The seller's undertaking thus imported covers all such defects as exist at the time of sale, regardless of whether or not the seller knows of them then".
In "voetstoots" sales when a thing is sold "as it is" or "as it stands", a seller's liability is excluded in respect of all defects in the thing of which he or she was genuinely ignorant up to and at the time of the sale. A seller will also not be liable for "defects" which were clearly visible or patent. The exception to this is set out in Van der Merwe v Meads 1991(2) SA 1 (A) at 8E-F where it was concluded that the seller will not be able to rely on the protection of a "voetstoots" clause where, having sold "voetstoots", she or he is aware of the defects at the time of making the contract and dolo malo conceals the existence of the defects with the intention of defrauding the purchaser. The seller in these circumstances is clearly under a duty to disclose to the purchaser defects of which he or she is aware, and the purchaser has a remedy if the seller has acted fraudulently.
The principles around the duty to disclose, giving rise to delictual liability and a claim for damages in relation to, inter alia, a negligent non-disclosure by way of negligent misrepresentation as set out by Van Zyl J in McCann v Goodall Group Operations (Pty) Ltd 1995(2) SA 718 (C) were then looked at. As was the more recent case of ABSA Bank Ltd v Fouche 2003(1) SA 176 (SCA).
For the Plaintiffs to succeed in their claim then, they had to prove that:
i. Defendants were aware of the defects as pleaded, if indeed the defects were latent, at the time of sale.
ii. Defendants had a duty to disclose the existence of the defects (as pleaded) to Plaintiffs at the time of sale.
iii. Defendants fraudulently concealed the existence of the defects, thereby inducing the contract, alternatively that Defendants fraudulently misrepresented that there were no defects.
What constitutes a latent defect is expressed in Dibley v Furter 1951(4) SA 73 (C) as being "those (defects) which either destroy or impair the usefulness of the thing sold for the purpose for which it has been sold or for which it is commonly used; (and) that the defect must be material. The test as to whether the defect has destroyed or impaired the usefulness of the thing is an objective one, in that the defect must have destroyed or impaired it for everyone, not just for the purchaser." To be "latent" such a defect must also not be reasonably capable of perception.
Without going into the technical details the court found that the house had been built on an uncontrolled fill site and because inadequate steps had been taken to provide for suitable footings and foundations, the house's usefulness or purpose for which it was bought was compromised. Given that the only time the dwelling was inspected externally was at night it was reasonable to assume that the crack was not seen and therefore no questions arose as to the foundations. Since the defects were not apparent, particularly to the untrained eye, the defects as pleaded were latent defects.
The next question to be answered was whether the Defendants were aware of the alleged defects at the time of sale, and if so, whether they were under a duty to disclose these to the Plaintiffs. Here the dictum of Silke J in Knight v Trollip regarding "voetstoots" sales is worth repeating, to wit:
"I think it resolves itself to this, viz that here the seller could be held liable only in respect of defects of which he knew at the time of the making of the contract, being defects of which the purchaser did not then know. In respect of those defects, the seller may be held liable where he has designedly concealed their existence from the purchaser, or where he has craftily refrained from informing the purchaser of their existence.
In such circumstances, his liability is contingent on his having behaved in a way which amounts to a fraud on the purchaser, and it would thus seem to follow that, in order that the purchaser may make him liable for such defects, the purchaser must show directly or by inference, that the seller actually knew. In general, ignorance due to mere negligence or ineptitude is not, in such a case equivalent to fraud".
The fact that the first Defendant concluded that the Plaintiffs had not seen the crack, because he conceded that had he been the one purchasing the house he would have asked about it implies that there must have been some element in the transaction beyond mere knowledge and non-disclosure - "designedly concealed" and "craftily refrained". The Defendants clearly held out then that the dwelling was free of defects, especially after telling the Plaintiffs that the only problem that they had had with the house was a leaking sliding door.
Lastly, was such concealment of the defects fraudulent or a false misrepresentation done with the intention of inducing the Plaintiffs to buy the property under circumstances where they had a duty to disclose the alleged defects? Taking the above into account it was concluded that on a balance of probabilities this indeed was the case. Silence was therefore fraudulent.
Consequently the court found that the contract of sale had to be cancelled, and the Plaintiffs accordingly be placed in the position that they would have been in had the contract not been concluded.
Division: High Court (Cape of Good Hope Provincial Division)