- Gauteng High Court finds buyers repudiated a signed property sale agreement.
- Seller entitled to keep the R78,702 deposit and recover R146,250 in estate agent’s commission.
- Appeal also succeeds for conveyancing attorneys who challenged a costs order.
A bid to negotiate a lower purchase price on a home has cost two buyers R224,952 after the High Court in Johannesburg found that an email they sent amounted to a repudiation of a signed property sale agreement.
Acting Judge Sarita Liebenberg, with Judge W Du Plessis concurring, upheld appeals by seller Sonja Hulley and her conveyancing attorneys, Rene Nortje t/a Nortje Attorneys.
The court ruled that Hulley was entitled to cancel the agreement, retain the R78,702 deposit and recover R146,250 in estate agent’s commission from Willem Abraham Alegra and Estelle Reinette Bronkhorst.
Sale agreement unravelled
Hulley sold the property to Alegra and Bronkhorst for R1.95 million in June 2018. The sale agreement was subject to the buyers selling their existing property and obtaining bond finance. Both suspensive conditions were fulfilled, making the agreement unconditional.
The transaction later ran into difficulty when it emerged during the transfer process that Alegra was an unrehabilitated insolvent. The bank withdrew its bond approval.
The parties then signed a memorandum of agreement allowing the buyers to apply for Alegra’s rehabilitation, obtain bond finance in Bronkhorst’s name or wait until Alegra became rehabilitated. Neither buyer pursued any of those options.
Email became the turning point
Instead, on 24 April 2019, Alegra emailed the conveyancer proposing that the purchase price be reduced before another bond application was submitted. He wrote, “We suggest a reduction in the selling price to accommodate the issues at hand.”
The email continued, “The defect needs to be repaired, or a new selling price must be negotiated, and then we will apply for the bond.”
It added, “If the seller is not prepared to look at this, we need to look at other options; therefore, applying for a bond on this property will be costly and a waste of time if everything is not sorted out beforehand.”
Hulley regarded the email as a repudiation of the sale agreement, accepted it and cancelled the contract.
High Court finds repudiation
The High Court agreed that the email demonstrated an intention not to be bound by the existing agreement.
Judge Liebenberg said, “On a plain reading of the email, it is evident that the first respondent sought to renegotiate material terms of the sale agreement, including the purchase price of the property and his obligation to obtain bond finance for the purchase price.
“An objective interpretation of the email marks it a clear intention not to be bound by the extant sale agreement, which renders it a repudiation.”
The court held that the correct test was whether a reasonable person would conclude that proper performance under the agreement would no longer be forthcoming.
Judge Liebenberg said, “The email clearly indicated that the respondents no longer wish to proceed with the sale at the existing price, nor would they take reasonable steps to obtain the bond finance contemplated under the sale agreement.
“Even on such a generous reading, the email amounts to a repudiation, as it clearly states that it cannot perform under the current agreement and proposes a wholly new deal.”
Seller entitled to compensation
Because Hulley validly accepted the repudiation, the High Court ruled that she was entitled to retain the R78,702 already paid by the buyers as rouwkoop.
The court also found that the buyers were liable for the estate agent’s commission because the sale failed as a result of their own conduct. After the commission claim was ceded to Hulley, she became entitled to recover R146,250 together with interest.
The appeal by the conveyancing attorneys also succeeded. The High Court found they had acted only as stakeholders by holding disputed trust funds until the parties’ rights had been determined.
It ruled there was no legal or factual basis for ordering them to pay the buyers’ legal costs and replaced that order with one directing each party to pay its own costs.
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