After the property sale for his house in Hout Bay worth millions fell through due to the Covid-19 pandemic, a UK accountant has lost his case to claim a R1m deposit as “damages”. Pam Golding, the property company which held the R1m deposit, was ordered to return it to the buyer.
In a unanimous ruling, the Supreme Court of Appeal (SCA) found the UK accountant “had not proved” his case. The judgment, from the second highest court in the country, can be used as precedent for contracts. Its view must be used in all agreements, and, in particular, in sale agreements throughout the country.
In early 2020, Christopher Hughes, an accountant living in the UK, marketed his Hout Bay home with the Pam Golding company. Meanwhile, another man, Peter Green, sought to buy his daughter and her family their own home. Green came across the Hughes’ property being marketed by Pam Golding.
Hughes agreed to sell the house to Green for about R5m and both men signed the sale agreement in February 2020, a month shy of the Covid-19 lockdown.
Part of the agreement stipulated Green had to pay a R1m deposit into Pam Golding’s trust account. Green would then have to obtain a mortgage and pay the rest to conveyancers to transfer the property.
The contract stipulated that if Green did not get the mortgage in time, then “the deposit ... shall be repaid in full to the purchaser”. In other words, the R1m must be returned to Green if he did not get the mortgage in time. Green was allowed to “waive” this mortgage clause to, for example, pay in cash if he notified Hughes in writing.
Green subsequently paid the deposit and sought to obtain the mortgage. However, he did not manage to secure a mortgage by the due date, April 2020. Furthermore, lockdown soon hit and the Deeds Offices were shut down throughout the country. This hampered Green’s ability to buy the property.
Eventually, in June 2020, Green was granted an almost R4m mortgage.
Hughes gave early access to Green’s daughter and her family. They remained on the property until August 2020, starting renovations. However, Green’s daughter and her family left the property by September 2020 after being informed it would have been illegal to renovate the building due to there being “no plans”.
Hughes’ lawyer said the daughter leaving constituted a “repudiation” of the original sale agreement and Hughes was allowed to “claim damages in full”. Green therefore said he was entitled to keep the R1m deposit being held by Pam Golding.
Green’s lawyers denied this.
As a result of this dispute, they brought the matter to the Western Cape High Court. In 2022, the high court agreed with Green and ordered Pam Golding to return the R1m. Unsatisfied with this, Hughes’ appealed to the SCA.
The SCA dismissed Hughes’ appeal bid on Friday.
Writing for a unanimous court, SCA acting judge Phillip Coppin dismissed Hughes’ arguments that if it was not Green himself, then his agents had waived Green’s right to the return of the R1m deposit.
The SCA said the Green’s representatives only acted in terms of “the transfer of property” into Green’s name. They were not involved in the money sale.
Coppin said in these kinds of cases the court would look at the conduct of the people in addition to whatever they signed. He pointed out that if Green truly wanted to waive his right to the return of the deposit, he had to follow the procedure in the sale agreement. This included the waiver be in writing which was not done.
Coppin emphasised its analysis of such agreements must be borne in mind whenever they were being drawn up. The court said all such agreements were “judged from the perspective of a reasonable person by its outward manifestations”, not by the subjective views of the litigants.
Coppin also quoted a contractual law textbook, which summarised the court’s views on waiver. “Having gone to all the trouble to acquire contractual rights people are, in general, unlikely to give them up. There is therefore a factual presumption, even in some cases a strong one, against waiver [by courts].”
Coppin noted this put a heavy “onus” on the person arguing waiver occurred, not on the one who denies the waiver. The onus had not been proven in this case, he said, but that did not mean it was impossible in general.
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