The Appellant’s claim is based on a written agreement of sale for immovable property entered into between the Respondent and the Seller which was dismissed by the Court a quo. The Appellant relied upon clause 3.4 of the agreement which read that should the sale be cancelled as a result of a defaulting party, then the latter would be liable to pay the agent’s commission.
The Respondent directed an sms to the agent acting for the Applicant stating that he would fail to perform and later sent an email cancelling the agreement. The attorneys for the Seller accepted the Respondent’s repudiation of the agreement and further indicated to the latter that he was liable for the estate commission of the Appellant in terms of the Agreement.
The Applicant’s counsel argued that the sms that the Respondent had sent was in anticipatory breach of the Agreement and his second cancellation (email) was accepted by the seller and viewed as a repudiation of the agreement. The counsel, therefore, concluded that the Respondent was in default of his obligations in terms of the agreement.
The Respondent’s counsel argued that neither of the parties defaulted in any of their obligations, it follows that if the Respondent was not in breach of the agreement there was no repudiation. It was argued that default in law has a context, as default and cancellation are two different things. For this argument the counsel relied heavily on the case of Jacobs v Tenner 1971(1) 263(T) at p266.
The case referred to is distinguishable from the matter in casu in several aspects. In the matter of Jacobs the seller was entitled to cancel the agreement of sale should the purchaser fail to make certain payments of rates and taxes to the Municipality, or otherwise commit any breach and remain in default for a period of 14 days.
The purchaser however had been given an extension by the Municipality within which to pay the rates and taxes and paid the rates and taxes in the extended period. The seller argued that as the Municipality was not a party to the agreement, and it was not an agreement for the benefit of a third party, the arrangement and extension of the time given by the municipality was irrelevant between the purchaser and seller.
The matter in casu is the opposite, the appellant is a third party to whom the benefit of the commission is due, and the Appellant is a party to the agreement between the Purchaser and Seller. The reference to default in this matter could, therefore, not be applied to the matter in casu.
The legal issue is whether the Respondent had defaulted by failing to perform his obligations in terms of the agreement, and whether as a result the Appellants were entitled to the agent’s commission in terms of the Agreement.
Judge S Strauss found that the Respondent, having regards to the repudiation and cancellation, was in default of his obligation in terms of the Agreement of sale, and further that the Respondent clearly indicated he would not fulfil his obligations in terms of the Agreement.
The appeal, therefore, was upheld with costs and the Respondent ordered to pay the costs of the application.
The test for repudiation is not subjective but objective. The test is whether a reasonable person would conclude that proper performance (in accordance with a true interpretation of the agreement) will not be forthcoming.
Whether the innocent party will be entitled to resile from the agreement will ultimately depend on the nature and the degree of the impending non or malperformance. The conduct from which the inference of impending non or malperformance is to be drawn must be clear cut and unequivocal.