Law Reports


Neutral citation: Rademeyer v Viljoen (69/11) [2010] ZASCA 189 (3 November 2011).
Coram: Brand, Van Heerden, Malan, Majiedt JJA et Plasket AJA
Heard: 3 November 2011
Delivered: 3 November 2011

This case highlights the necessity for purchasers to expressly agree that the deposit has to be held in trust pending transfer.  A purchaser - Rademeyer - bought three farms from a farming trust at auction.  He paid a 20% (R900 000) deposit to the auctioneer who then paid it to the trusts creditors on confirmation of the sale.  Rademeyer cancelled the sale when he became aware that land claims had been filed against the property in terms of the Restitution of Land Rights Act 22 of 1994 and sued for the return of his deposit.  Judgement was granted in his favour, unfortunately the trust was sequestrated and he was left with a concurrent claim against it, for which he recovered a dividend of under R200 000 he thereupon instituted an action against the auctioneers (Swanepoel & Partners Auctioneers) for the balance and a separate action against one of the trustees.  

Clauses 6 and 16 of the Conditions of Sale are pertinent and read as follows:

‘6. The purchaser shall pay a deposit of 20% (twenty per cent) of the purchase price in cash on the day of the sale, the balance against transfer, however, to be secured by an acceptable bank guarantee to be approved by the seller’s attorney and to be furnished to the said attorney within 30 days from date of confirmation.

. . .16. The seller warrants the following:
16.1 That he has no knowledge of any claims or indication of any claims made by any third party in respect of the whole or any portion of the property in terms of the provisions of the Restitution of Land Rights Act 22 of 1994 and do hereby authorise the purchaser to make any enquiries in this regard to the relevant authorities as to ensure that no such claims do exist.
16.2 Should it transpire that any claims have indeed been made by any third party in respect of the property in terms of the provisions of the said Act, then the purchaser shall at his election be entitled, but not obliged, to withdraw from this agreement in which event all amounts as paid by the purchaser shall be repaid to him by the seller – subject however thereto that the purchaser shall not be entitled to rely on this clause for repayment once transfer has been effected and the balance purchase price has been paid.’
The claim against the auctioneers rested on five alternative grounds of which the main one in broad outline amounted to the following:
at [8] ... 'it departed from the premise that the contract embodied in the conditions of sale constituted a tripartite agreement between the trust, Rademeyer and the auctioneers. On a proper interpretation of that agreement, so Rademeyer’s particulars of claim proceeded, the auctioneers undertook not to pay the deposit to the trust pending transfer of the property, but that they would keep it in their trust account until the occurrence of that event.
In dismissing the appeal the court agreed with the court a quo in that :
[9] ...Rademeyer’s main claim was not supported by a proper interpretation of the sale. I agree. Clause 6 refers to two payments: (a) the deposit and (b) the balance of the purchase price. The payment in (b) is manifestly to be made to the seller. Since the clause draws no distinction between the recipient of (a) and (b), logic dictates that they were both to be made to the seller.
[10] In this light the auctioneers could only accept payment of the deposit as agent for the seller. No doubt the contract could have provided that the agent must keep the deposit in trust, either as agent for the purchaser or as a stakeholder, pending transfer. That is illustrated by numerous reported cases.  The point is that the contract made no such provision. In consequence the prepayment of the deposit provided for by the contract had to be made to the seller.  If anything, this interpretation of clause 6 is supported by clause 16 of the contract which was the very basis relied upon by Rademeyer for his claim against the trust.  This clause expressly provides that, in the event of  cancellation by the purchaser, the seller would be the party obliged to repay, which presupposes that the seller was the recipient prior to transfer. 
[11] Thus understood, the auctioneers had no right to retain the deposit.  On a proper interpretation of clause 6 they were obliged to pay the deposit to the trust on the date of sale which was the date of confirmation under clause 17.  This is exactly what Viljoen did. It follows that the main claim was rightly
dismissed by the court a quo.'

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