At the heart of this legal battle lies an agreement of sale for an immovable property situated in Hout Bay. The protagonists are Christopher Charles Hughes (the applicant) and Nicolas Gargassoulas (the first respondent), along with Cindy-Ann Oosthuizen (the second respondent) and Pam Golding Properties Pty Ltd (the third respondent). The dispute centres around the validity of the agreement, the waiver of suspensive conditions, and the cession of rights related to a substantial deposit. In this article, we delve into the facts, legal arguments and the court’s decision in this intriguing case, which has far-reaching implications for property buyers, sellers and real estate professionals.

The dispute centred around an agreement of sale entered into between the applicant and Mr Peter Henry Green for the sale of the applicant’s immovable property through the agency of Pam Golding Properties. The property sale agreement between Green and the applicant was finalised on 12 February 2020 and the agreed purchase price was R4,950,000. According to the terms of the agreement, Green was required to deposit R1 million into Pam Golding Property’s trust account within seven business days of signing the agreement. Additionally, he was to pay the remaining purchase price to the conveyancing attorneys appointed by the applicant upon property transfer registration.

Clause 6.1 of the agreement stipulated that the sale was subject to a suspensive condition. Green needed to secure mortgage loan approval for the balance of the purchase price by 13 March 2020. Notably, Clause 6.2 allowed Green to waive this condition by providing written notice to the seller before the fulfilment or waiver date. If the suspensive condition remained unmet by the due date, the agreement would become null and void, and the deposit, along with any accrued interest, would be promptly refunded to the purchaser within five business days.

Unfortunately, Green failed to meet this condition, resulting in the agreement lapsing. As a consequence of the lapsed agreement, the High Court ordered the third respondent to refund the substantial deposit that Green had paid to the first and second respondents.

The importance of precise contractual terms

As a point of departure, the Supreme Court of Appeal (SCA) observed that the applicant and Green operated under the mistaken belief that the agreement remained valid and was still subject to the suspensive condition. This is because Green had, before the due date, offered to pay the remaining balance in cash and the parties mistakenly constituted this as a waiver of the suspensive condition. However, the High Court found that Green did not waive the suspensive condition by written notice in terms of Clause 6.2 and the agreement had actually lapsed because the condition was not met by the stipulated due date.

The SCA, after careful consideration, rejected the applicant’s argument that the High Court had erred in determining that Green had not waived his reliance on the suspensive condition. The SCA found that the applicant had failed to meet the burden of proving that Green had waived the benefit of the suspensive condition. Consequently, the High Court’s finding was deemed sound and beyond reproach.

For these reasons, the SCA found that Green was entitled to the refund of his deposit. Furthermore, he was entitled to transfer his rights to the deposit to the first and second respondents and any counterargument was deemed to have no reasonable chance of success.

This judgment underscores the importance of precise contractual terms and adherence to legal requirements in property transactions. It serves as a reminder to all parties involved in property sales to carefully consider the implications of suspensive conditions and their impact on the validity of agreements.