THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Case No:  203/11
(Not reportable)
In the matter between:

B B S EMPANGENI CC                                                                          Appellant
(FORMERLY ZTC CASH BUILD CC)

and

PHOENIX INDUSTRIAL PARK (PTY) LTD                               First Respondent
MORELAND ESTATES (PTY) LTD                                     Second Respondent

Neutral citation:   BBS Empangeni CC v Phoenix Industrial Park (Pty) Ltd
(203/2011) [2012] ZASCA 33 (29 March 2012).

Coram:
Brand, Heher, Van Heerden, Cachalia JJA, Boruchowitz AJA
Heard:
16 February 2012
Delivered:
29 March 2012

Summary:    Extinctive Prescription – claim prescribed – contractual
obligations underlying claim no longer enforceable – contract not capable
of being repudiated.

________________________________________________________________

ORDER
________________________________________________________________

On appeal from:  KwaZulu-Natal High Court, Durban (Swain J sitting as court of
first instance):

The appeal is dismissed with costs, such costs to include the costs of two
counsel for the first respondent and one counsel for the second respondent.

________________________________________________________________

JUDGMENT
________________________________________________________________

CACHALIA JA (Brand, Heher, Van Heerden JJA, Boruchowitz AJA concurring):

[1] This is an appeal from a judgment of Swain J sitting in the KwaZulu-Natal
High Court. He held that a contractual claim arising from the sale of certain
vacant land in an industrial township had become prescribed. The appellant,
represented by its member, Mr Donovan William Balmer, bought the land from
the respondents under a sale agreement on 11 January 1990. With leave from
the high court, it appeals against the finding of that court.

[2] The dispute goes back many years – more than two decades – and it is
necessary to describe its history. In terms of the agreement the appellant paid to
the respondents a stipulated deposit of R45 500 – which amounted to ten per
cent of the purchase price. The balance was to be paid upon registration of
transfer. The sale was subject to two suspensive conditions: first, the Surveyor-
General’s approval of the sub-divisional diagram consolidating the four lots of
land that were the subject of the agreement and second, the City Engineer’s

certification of compliance in terms of s 148 of the Durban Extended Powers
Consolidated Ordinance 18 of 1976. The agreement stipulated that the property
would become transferable as soon as these conditions were fulfilled.

[3] A dispute arose between the parties almost immediately over aspects of
the completion of the industrial township. Mr Balmer was troubled that there was
inadequate provision made for features relating to security, street lighting, tarred
roads and services. I shall refer to these as the security features. His unease
arose because the industrial township was located near an area with high
unemployment and criminality. The country was also in a state of political
uncertainty and there was some unrest in the area. Mr Balmer therefore felt that
he would not be able to commence business on the property.

[4] These circumstances made Mr Balmer less enthusiastic about taking
transfer of the property and he approached the respondents to cancel the
agreement. They demurred and insisted that he pay the balance of the purchase
price. His attorneys then made written representations to the respondents to
delay transfer of the property until his security concerns were allayed, but they
accepted ‘unequivocally’ that he was ‘bound to take transfer’. In other words,
Mr Balmer did not dispute his obligation to take transfer of the property and to
pay the purchase price.

[5] The respondents, however, maintained that the security provided for in the
development was adequate and that, in any event, there were no warranties
regarding the security features in the agreement. They proceeded to enforce the
agreement by demanding payment of the balance of the purchase price against
tender of registration of transfer. The appellant responded to the demand by
reiterating its earlier stance regarding the delay of the transfer. It also offered to
give the respondents ‘a bank guarantee for the payment of the purchase price
against transfer at some later stage’.

[6] The respondents indicated that they were willing to delay payment of the
full purchase price only until 29 February 1992 on condition that the appellant
paid an additional sum of R100 000 as consideration by 18 October 1991.
Mr Balmer did not pay this amount and now insisted that he would pay for the
land only when the development was completed as originally envisaged. This
stance was a change from his earlier acknowledgment that he was liable to take
transfer. To support his new standpoint he referred to the contents of a pamphlet
that the respondents had shown him at the time he agreed to buy the land. The
pamphlet depicted the detail of the completed development including the security
features.

[7] The dispute was not resolved and, on 13 August 1992, the respondents
applied to the high court to order the appellant to pay the transfer costs and the
balance of the purchase price against tender of transfer of the land. The
appellant duly delivered its answering affidavit in which it asserted – reflecting its
new stance – that the agreement was to be rectified to include the security
features referred to in the pamphlet so as to accord with the common intention of
the parties.

[8] The appellant also disputed that the second suspensive condition
mentioned above – the City Engineer’s compliance certificate – had been
fulfilled. The City Engineer issued a certificate on 15 March 1991. The appellant
took the point that s 148(2) of Ordinance 18 of 1976 called for the Town Clerk –
not the City Engineer – to sign the certificate. This meant, so the appellant
asserted, that the respondents were not in a position to pass transfer of the
property. The respondents did not file a replying affidavit and, during
February 1992, they enrolled the matter to be heard on an allocated date, but the
matter did not then proceed. The parties took no further steps and, on
11 September 1992, the respondents removed the matter from the roll.

[9] In the interim the respondents were advised by counsel that Mr Balmer’s
defence concerning the fulfilment of one of the two suspensive conditions – the
compliance certificate – was good. The implication of this advice was that this
condition had not been fulfilled and the property was therefore not registrable.
During June to October 1994 the respondents’ attorneys again attempted to
persuade Mr Balmer to take transfer, but he remained unyielding.

[10] On 4 October 1994, the respondents were registered as the title holders in
the Certificate of Registered Title – an event of which Mr Balmer was at the time
not aware. Nevertheless, the consequence was that it was no longer in dispute
that both suspensive conditions had now been fulfilled, and the property could
have been transferred to the appellant in terms of the agreement.

[11] Although there was further communication between the parties concerning
the implementation of the agreement, the respondents made no particular
mention that the property had become registrable. However, on 17 October
1994, Mr Yarker, the respondents’ attorney, wrote to Mr Balmer to discuss
finalisation of the matter.

[12] By December 1994 the respondents considered cancelling the sale, but
there is no clear evidence that they did so. At about this time there was a
telephone conversation between Mr Kenneth Forbes of the respondents and
Mr Balmer during which Mr Forbes asked Mr Balmer whether he was prepared to
take transfer of the property. Mr Balmer again refused. Beyond this, what exactly
was said had faded from their memories. What is clear is that Mr Balmer
remained unwilling to take transfer of the property as the issues pertaining to his
security concerns had not been resolved. Mr Forbes was left with the impression
that Mr Balmer was not interested in proceeding with the sale. The respondents
then began to explore options to find another buyer for the property. There was
no further communication between the parties for several years.

[13] On 18 October 2000, unbeknown to the appellant, the respondents sold
the property to the eThekwini Municipality, and transfer was passed on
20 December 2002. Three more years went by.

[14] On 4 November 2005 – almost 11 years after his last communication with
the respondents – Mr Balmer stirred. He requested his attorneys to establish
what had happened to the property, and discovered that the municipality owned
it. So he instructed his attorneys to recover the deposit he had paid in 1990
together with interest, but the parties were not able settle this dispute either. The
appellant believed that the sale and transfer of the property was a breach of the
agreement between the parties and an ‘uncommunicated’ repudiation of it.

[15] On 11 July 2006 the appellant notified the respondents’ attorneys that it
had elected to cancel the contract and to claim repayment of the deposit plus
‘damages’ in the amount of R390 000, ‘being the return which [the appellant]
would have earned on the [deposit] over the last 16 years’. These amounts were
not forthcoming.

[16] On 19 July 2006, the appellant resuscitated the dormant application by
delivering a supplementary affidavit and, on 21 August 2006, it commenced an
action against the respondents for recovery of the deposit as well as damages for
breach of contract amounting to R3 125 500. The amount of damages was
calculated by subtracting the purchase price of the property from its market value
as at 11 July 2006. It is evident that there had been a dramatic increase in the
value of property since the agreement was concluded in 1990.

[17] The respondents delivered their pleas and special pleas in the action on
20 November 2006 and their replying affidavits in the application proceedings on
11 May 2007. On 15 May 2007 the high court referred the question of costs –
which was the only remaining issue in the application proceedings – to the trial
court. The trial commenced on 19 October 2009. Proceedings were adjourned

and resumed on 1 December 2010. The court delivered its judgment promptly on
6 January 2011. It dismissed the appellant’s action and granted it leave to appeal
on 4 March 2011.

The proceedings before the trial court
[18] The central issue before the trial court was whether the respondents had
repudiated the agreement with the appellant by selling the property to the
municipality in October 2000. The appellant’s case was that they had, which
entitled it to cancel the agreement. The respondents pleaded that they had
cancelled the agreement before selling the property and had informed Mr Balmer
that they had done so, after the appellant had repudiated the agreement by
refusing to take transfer. The respondents also advanced alternative defences.
The first respondent alleged that the appellant had waived or abandoned its
rights under the agreement. The second respondent contended that the appellant
had represented to the respondents that it no longer wished to be bound by the
agreement, and was thus estopped (prohibited) from asserting the contrary.

[19] The respondents further pleaded that the appellant’s claim had become
prescribed. In this regard two distinct periods, associated with two distinct claims,
were in issue: first, from the time when the suspensive conditions had ultimately
been satisfied on 4 October 1994 and the transfer of the property to the
municipality on 20 December 2002, when the respondents were alleged to have
repudiated the agreement, and second, the period between 20 December 2002
and the issue of summons on 21 August 2006. If the first period applied, the
appellant’s claim to demand transfer of the property would have become
prescribed on 3 October 1997. In the case of the second period the prescriptive
period would have expired by 19 December 2005 in respect of the appellant’s
right to claim cancellation of the agreement, payment of the deposit and
damages.

[20] In deciding whether or not the respondents had validly cancelled the
agreement before transferring the property to the municipality, the judge
considered that, once they had changed their election from specific enforcement
in the application proceedings to cancellation, they were obliged under the
agreement to notify the appellant of this fact. He held that the evidence did not
establish that the respondents had done so. In the light of this conclusion the
court deemed it unnecessary to consider whether the appellant’s conduct in
refusing to take transfer amounted to a repudiation of the agreement, entitling the
respondents to cancel the agreement. The court also briefly considered the first
and second respondent’s waiver and estoppel defences respectively, and
rejected both. This left prescription.

[21] Concerning the first period referred to above – 4 October 1994 to
20 December 2002 – the trial court held that prescription had begun to run in
respect of the respondents’ right to claim payment and also of the appellant’s
right to claim transfer on 4 October 1994, when the suspensive conditions were
satisfied. It also held that the appellant ought reasonably to have ascertained this
fact by December 1994, when – from the communications between the parties’
representatives – it would have been clear to the appellant that the respondents
were ready to transfer the property. Furthermore, the court concluded, there was
no merit in the appellant’s contention that the respondents had wilfully concealed
the fulfilment of the suspensive conditions from it. The appellant’s claim was thus
held to have become prescribed.

[22] The court also considered and rejected another of the appellant’s
contentions – that the launching of application proceedings by the respondents in
August 1992 constituted an acknowledgment of liability to transfer the property
and therefore ‘interrupted’ the running of prescription as contemplated in s 14(2)
of the Prescription Act 68 of 1969 (the Act). The judge reasoned that when the
respondents began those proceedings, they did so because the appellant had
maintained that it was not obliged to pay the purchase price. Whether the

appellant was justified in its stance, the court said, was of no consequence. What
was relevant, it continued, was that the respondents had not believed that they
were liable to transfer the property to the appellant without the latter’s payment of
the balance of purchase price and the transfer costs. And, the court concluded, in
the absence of the respondents’ unconditional acknowledgment of liability to
pass transfer, prescription had not been interrupted.

[23] The conclusion that the claim had become prescribed during the first
period made it unnecessary for the trial court to consider the second period,
20 December 2002 to 21 August 2006. The judge nevertheless did so ‘for the
sake of completeness’. He found that the appellant had consciously refrained
from enquiring what had happened to the property for fear that this may revive
the respondents’ demand that it take transfer. And, the court concluded, in the
light of the fact that the respondents had sold the property to the municipality in
October 2000, this information would have been available to the appellant – at
the latest by the end of 2001 – by the exercise of reasonable care.

[24] As to whether the respondents had wilfully refrained from disclosing the
sale of the property, the court held – as it did regarding the disclosure of the
fulfilment of the suspensive conditions – that they had not. In this regard the court
accepted the respondents’ evidence that, by the time they had decided to sell the
property to the municipality, they had assumed that the agreement had been
cancelled. There was consequently no reason, the court said, for the
respondents to have intentionally withheld this information from the appellant.
Therefore, and allowing the appellant another reasonable period of six months
after the end of 2001 within which to make an election to treat the contract as at
an end, prescription, the court held, began to run from no later than 1 July 2002,
and would thus have run its course by 30 June 2005. Therefore, the judge
concluded, because the appellant served its summons only on 21 August 2006,
its claim for cancellation of the agreement, payment of the deposit and damages
had also become prescribed during the second period.

The grounds of appeal
[25] As will become apparent later in this judgment, I think that the judge’s
finding that prescription had begun to run on 4 October 1994, when the
suspensive conditions were fulfilled, and that the appellant’s claim had become
prescribed well before the respondents transferred the property to the
municipality in December 2002, disposes of the appeal. The appellant advanced
three grounds of criticism against the finding. First, that the high court had
erroneously assumed that the appellant’s cause of action was for the transfer of
the property because of the respondents’ correlative right to demand payment as
at 4 October 1994. The appellant’s true cause of action, it was contended, was
based on the respondents’ repudiation of the agreement, which occurred when
they transferred the property to the municipality much later. And the claim arising
from the repudiation only arose on 11 July 2006, when the appellant exercised its
election to cancel the contract. Second, it was contended, the appellant’s cause
of action on 4 October 1994, as pleaded in its opposing affidavit in the application
proceedings, was for the agreement to be rectified, which is a claim that cannot
prescribe because it is not a claim in respect of a debt. Third, the respondents’
cause of action was in any event not complete on 4 October 1994 because they
had not installed the security features under the rectified agreement. This means,
so the contention went, that the respondents’ claim to receive payment (and the
appellant’s obligation to take transfer) could not have begun to run then. I deal
with the appellant’s three contentions in turn.

[26] As to the first – that its claim was not for the transfer of property, I do not
believe that the judge misunderstood the nature of the appellant’s claim. What
the court found under this heading was that the appellant’s claim for the transfer
of the property had become prescribed before the respondents sold the property
to the municipality – and the appellant thus had no enforceable obligation against
the respondents. In consequence the sale could not constitute a repudiation of
the agreement. I have no conceptual difficulty with this line of reasoning.

[27] It is beyond dispute that the suspensive conditions were fulfilled by
4 October 1994. This means that the respondents’ claim for payment of the
purchase price as against their obligation to transfer the property to the appellant
arose then. So prescription would have begun to run against this claim – and the
appellant’s correlative claim for transfer of the property – on 4 October 1994,
when the debt became due in terms of s 12(1) of the Act. Both claims, being
reciprocal, would thus have become prescribed three years later, on 3 October
1997.1 However, if the respondents had wilfully withheld information regarding
the fulfilment of the suspensive conditions – and that the debt was therefore due
– from the appellant, prescription would not have commenced running until the
appellant became aware of the existence of the debt.2 The appellant would be
deemed to have had such knowledge if it could have acquired it by exercising
reasonable care.3 As I have mentioned the high court decided these issues in the
respondents’ favour. The appellant takes issue with these findings.

[28] Concerning the first finding, that the non-disclosure of the fulfilment of the
suspensive conditions was wilful, the appellant submits that the respondents
deliberately withheld this information – the consequence of which was that the
property had become registrable – from it for fear of having to pay its costs in the
application proceedings.

[29] The evidence shows that after their attorneys advised them that the point
taken by the appellant regarding the validity of the certificate was good, the
respondents resubmitted the sub-divisional diagram for endorsement after
correcting the error, even though it had been pointed out to them that

1 Santam Ltd v Ethwar 1999 (2) SA 244 (SCA) at 255B-G.
2 Section 12(2) of the Prescription Act provides: ‘If the debtor wilfully prevents the creditor from
coming to know of the existence of the debt, prescription shall not commence to run until the
creditor becomes aware of the existence of the debt.’
3 Section 12(3) of the Prescription Act provides: ‘A debt shall not be deemed to be due until the
creditor has knowledge of the identity of the debtor and of the facts from which the debt arises:
Provided that a creditor shall be deemed to have such knowledge if he could have acquired it by
exercising reasonable care.’

resubmission might lead to an adverse costs order against them. The
respondents instructed their attorneys to oppose such an order on the ground
that the practice had always been for transfers to take place under the city
engineer’s endorsement. However, there is not a scintilla of evidence to support
the suggestion that the respondents had deliberately withheld information
regarding the resubmission from the appellant. The high court correctly found
that the evidence showed that the respondents had throughout, at least until the
discussion between Mr Forbes and Mr Balmer in December 1994 – two months
after the certificate of registered title had been granted – evinced an intention to
proceed with the transfer. It is any event improbable that the respondents would
have consciously prevented the appellant from coming to know that the property
had become registrable for the simple reason that they wanted the property
transfer to go ahead – not delayed or terminated – and were frustrated because
Mr Balmer appeared to be intent on delaying it. Furthermore, it was never put to
any of the respondents’ witnesses that they had withheld this information from
the appellant for fear that the appellant would seek a costs order against them.
The evidence simply falls far short of establishing that the respondents
deliberately withheld this information from the appellant, and the high court was
correct to dismiss this argument.

[30] I turn to the appellant’s second submission – that the high court erred in
finding that Mr Balmer ought to have known by no later than December 1994 that
the property had become registrable had he exercised reasonable care. In this
regard the appellant contends that it was perfectly reasonable for it to have done
nothing while the dispute regarding the non-fulfilment of the suspensive
conditions and rectification were, in Mr Balmer’s words, ‘locked . . . up in the
courts’. This was a reference to the fact that nothing had come of the motion
proceedings that the respondents had initiated (but removed from the roll). The
judge, however, meticulously recorded the interactions between the respondents
and Mr Balmer from June to December 1994, and particularly the conversation
between Mr Forbes and Mr Balmer in December – when Mr Forbes pressed

Mr Balmer to take transfer of the property. As the evidence showed, Mr Balmer
demurred and informed Mr Forbes that he was not in a position to take transfer
then. In effect Mr Balmer again wanted to delay the transfer as he had done
virtually from the beginning.

[31] Although Mr Forbes could not recollect the detail of the conversation –
understandably, because it had taken place so long ago – there is no evidence
that Mr Balmer enquired whether the requisite certificate from the municipality
had been obtained. This behaviour is strange for a person who was advised to
resist the respondents’ attempt to enforce the agreement by taking a technical
point that the certificate was not signed by the correct official, and a few months
later, when he was asked whether he was prepared to take transfer, did not
enquire – then or soon afterwards – whether this problem had been solved.

[32] I do not think that Mr Balmer’s excuse that he had no need to do anything
while the motion proceedings were pending passes the test for the exercise of
reasonable care. The contrary is true. By December 1994, following the
conversation with Mr Forbes, it must have been clear to Mr Balmer that the
respondents were ready to transfer the property to him whatever the status of
their legal dispute. But it is equally clear that Mr Balmer was not interested in
taking transfer of the property; at best he was intent on delaying the process until
his security concerns were addressed, at worst he wanted to walk away from the
agreement, and was prepared to use any excuse to achieve this. This attitude,
rather than the fact that the litigation had not been finalised, appears to have
been the probable reason for Mr Balmer’s failure to act diligently to establish
whether the suspensive conditions had in fact been satisfied. Again, the
appellant’s criticism of the high court’s judgment must founder.

[33] This brings me to the appellant’s third submission – that its rectification
defence in the application proceedings, being a claim that cannot prescribe,
meant that its claim on the ‘rectified’ contract could not have become prescribed.

The corollary of this submission is that prescription could not have begun to run
against the respondents’ claim for payment of the purchase price on the
unrectified agreement on 4 October 1994.

[34] This submission has no merit. The appellant’s cause of action as pleaded
in its particulars of claim was that the respondents repudiated the agreement
concluded in 1990 – not the rectified agreement. In respect of that agreement, as
I have mentioned, it is common cause that prescription began to run on
4 October 1994 against both the respondents’ claim for payment of the purchase
price and the appellant’s corresponding obligation to take transfer. And once the
claim based on that agreement became prescribed, the respondents could
logically no longer have repudiated it.

[35] Moreover, the respondents are correct in their submission that the claim
for rectification was not one that, if successful, was an answer to their claim for
payment of the purchase price. This is because the clause that the appellant
sought to have inserted into the contract, as formulated in its answering affidavit,
did not create reciprocal obligations – it provided only that the respondents install
the security features within a reasonable time of the fulfilment of the suspensive
conditions. The respondents were never placed in mora in respect of the
obligation that that clause would create. So the appellant’s assertion that
prescription of the respondents’ claim for payment of the purchase price had not
started to run because the security features had not been installed is incorrect.

[36] Finally, the appellant submitted that, if prescription had begun to run
against it on 4 October 1994, the respondents’ admission in their founding
papers in the application that they were obliged to give transfer to the appellant
upon fulfilment of the suspensive conditions, amounted to an express or tacit
admission of liability to give transfer to the appellant against payment of the
purchase price. Therefore, so the submission went, in terms of s 14(1) of the Act
the running of prescription was interrupted when these admissions were made.

[37] Section 14(1) of the Act says that the running of prescription is interrupted
when a debtor acknowledges liability, and s 14(2), that prescription runs afresh
from the day of the interruption. The appellant contends that, when the
respondents acknowledged their legal responsibility to transfer the property to
the appellants in the application proceedings – which, it said, was a continuing or
recurring admission of liability – prescription was interrupted. The trial court
rejected the contention holding that the tender to transfer the land was
conditional upon the appellant’s unconditional acceptance of an obligation to
furnish a guarantee to secure payment of the purchase price and to pay transfer
costs, which did not happen. Being conditional, so it was held, the respondents’
acknowledgment was not an admission of liability as contemplated by the
section.

[38] The appellant contends that the court was incorrect to characterise the
respondents’ tender to transfer the property against payment of the purchase
price as a ‘conditional’ acknowledgement, which fell outside the ambit of s 14(1).
In my view the judge again was correct. In Road Accident Fund v Mothupi4 this
court said that whether or not a statement constitutes an acknowledgement of
liability for the purpose of s 14 of the Act is a question of fact turning on the
intention of the debtor – the respondents in this case. It is clear from a fair
reading of the respondents’ founding affidavit in the application proceedings and
their evidence at the trial that they were only prepared to give transfer of the
property if the appellant accepted its reciprocal obligation to take transfer and
pay the purchase price. And, even though the appellant had initially accepted
that it was ‘bound to take transfer’, it changed tack because of Mr Balmer’s
security concerns; its stance was that it was not obliged to take transfer or to pay
the balance of the purchase price – hence the respondents’ decision to enforce
the contract. The respondents’ tender to transfer the property was therefore
conditional upon the appellant accepting that it was liable to take transfer and to

4 See Road Accident Fund v Mothupi 2000 (4) SA 38 (SCA) para 37.

pay the purchase price – and did not amount to an acknowledgment of liability
contemplated by s 14 of the Act.

[39] To conclude, the high court correctly held that both the appellant’s and the
respondents’ claims arising from the agreement had become prescribed before
the property was transferred to the municipality in 2002. This means that when
the property was transferred there was nothing left of the agreement to be
repudiated. This conclusion renders it unnecessary to consider the other findings
of the high court.

[40] The following order is made. The appeal is dismissed with costs, such
costs to include the costs of two counsel for the first respondent and one counsel
for the second respondent.5

______________
A CACHALIA
JUDGE OF APPEAL

5 The second respondent engaged the services of only one counsel for the appeal.

APPEARANCES

For Appellant:
G D Harpur SC

Instructed by:

Pearce Du Toit and Moodie, Durban

Naudes Attorneys, Bloemfontein

For first Respondent:
P J Olsen SC (with him P J Combrinck)

Instructed by:

Livingston Leandy Inc, Durban

McIntyre & Van der Post, Bloemfontein

For second Respondent: A M Stewart SC

Instructed by:

Garlicke & Bousfield Inc, Durban

Webbers Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE
SUPREME COURT OF APPEAL
MEDIA SUMMARY – JUDGMENT DELIVERED IN COURT OF
APPEAL
29 March 2011

STATUS: Immediate

BBS Empangeni CC v Phoenix Industrial Park (Pty) Ltd (203/2011)

Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal

The Supreme Court of Appeal (the SCA) today dismissed an appeal with costs from
the KwaZulu-Natal High Court, Durban finding that BBS Empangeni CC’s claim from
Phoenix Industrial Park for breach of contract over the sale of land in 1990 had
become prescribed.

The appellant (BBS Empangeni) bought a land in an industrial township from the
respondents (Phoenix Industrial Park) under a sale agreement. The sale was subject
to two suspensive conditions one of them being the City Engineer’s certification of
compliance. BBS Empangeni refused to take transfer of property based on its
concerns about the security features of the industrial township. Phoenix Industrial
Park applied to the high court to order BBS Empangeni to pay the transfer costs and
the balance of the purchase price against tender of transfer of the land. BBS
Empangeni in response disputed the fulfilment of the suspensive condition for the
sale of the land on the ground that the wrong official had signed the compliance
certificate; hence, transfer of the land could not take place. Phoenix Industrial Park
subsequently fulfilled the suspensive conditions of the sale and acting in the
knowledge that BBS Empangeni was still unwilling to take transfer of the property
sold the property to a third party. When BBS Empangeni discovered that the land
had been sold, it instituted an action for damages for breach of contract against
Phoenix Industrial Park. It alleged that the sale and transfer of the property was a
breach of the agreement between the parties and a repudiation of it.

The central issue before the high court, which was also the issue on appeal, was
whether BBS Empangeni’s claim had become prescribed. The high court held that
prescription had begun to run from the date the suspensive conditions of the sale

had been fulfilled, in 1994, and that the BBS Empangeni’s claim had become
prescribed three years later, long before the property was sold to a third party. The
court also held that Phoenix Industrial Park had not wilfully concealed the fulfilment
of the suspensive conditions and that BBS Empangeni would have discovered this
fact had it exercised reasonable care. The SCA confirmed the high court’s findings.